Strategic Management chapter 7, Strategic Management chapter 5, Strategic Management Chapter 6

68. (p. 232) An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called A. greenmail. B. a poison pill. C. a golden parachute. D. scorched earth.

B. a poison pill.

34. (p. 206) Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as A. utilizing common infrastructures. B. capitalizing on core competencies. C. reducing corporate risk. D. using portfolio analysis.

B. capitalizing on core competencies.

72. (p. 269) __________ entail the creation of a third-party legal entity, whereas __________ do not. A. Licensing agreements; joint ventures B. Joint ventures; strategic alliances C. Strategic alliances; joint ventures D. Franchising agreements; strategic alliances

B. Joint ventures; strategic alliances

50. (p. 258, 260) High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy? A. Global B. Multidomestic C. Transnational D. Overall cost leadership

B. Multidomestic

48. (p. 215) __________ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change. A. Parenting B. Restructuring C. Leveraging core competencies D. Sharing activities

B. Restructuring

48. (p. 250) Pressures to "reduce costs" require that A. a company should not trade idiosyncratic preferences in product features for higher economic returns. B. a company must pursue what is economically beneficial to the company including maximizing economies of scale and learning curve effects. C. the manager should follow a multidomestic strategy to maximize the economic benefits to the company. D. the company needs to supplement the local foreign economy in a manner specified by the local government.

B. a company must pursue what is economically beneficial to the company including

32. (p. 204) Individual investors are dependent upon the corporations managers to A. diversify the stockholders investments in order to reduce risk. B. add value to their investments in a way that the stockholders could not accomplish on their own. C. achieve risk reduction at a lower cost than stockholders could obtain on their own. D. maximize short-term returns in the form of dividends.

B. add value to their investments in a way that the stockholders could not accomplish on their own.

32. (p. 204) Individual investors are dependent upon the corporations managers to A. diversify the stockholders investments in order to reduce risk. B. add value to their investments in a way that the stockholders could not accomplish on their own. C. achieve risk reduction at a lower cost than stockholders could obtain on their own. D. maximize short-term returns in the form of dividends.

B. add value to their investments in a way that the stockholders could not accomplish on their own.

73. (p. 271) A __________ is a business in which a multinational company owns 100 percent of the stock. A. joint venture B. strategic alliance C. wholly owned subsidiary D. franchising operation

C. wholly owned subsidiary

53. (p. 219) Portfolio management frameworks (e.g., BCG matrix) share which of the following characteristics? A. Grid dimensions are based on external environments and internal capabilities/market positions. B. Businesses are plotted on a 3-dimensional grid. C. Position in the matrix suggests a need for, or ability to share, infrastructures or build on core competences. D. They are most helpful in helping businesses develop types of competitive advantage.

A. Grid dimensions are based on external environments and internal capabilities/market positions.

54. (p. 217) A "cash cow," referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has A. low market growth and relatively high market share. B. relatively low market share and low market growth. C. relatively low market share and high market growth. D. high market growth and relatively high market share.

A. low market growth and relatively high market share

58. (p. 220) The three primary means by which a firm can diversify are: A. mergers and acquisitions; joint ventures and strategic alliances; internal development. B. mergers and acquisitions; differentiation; overall cost leadership. C. joint ventures and strategic alliances; integration of value chain activities; acquiring human capital. D. mergers and acquisitions; internal development; differentiation.

A. mergers and acquisitions; joint ventures and strategic alliances; internal development.

64. (p. 228) Which of the following statements regarding internal development as a means of diversification is FALSE? A. Many companies use internal development to extend their product lines or add to their service offerings. B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. C. The firm is able to capture the wealth created without having to "share the wealth"; with alliance partners. D. Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

B. An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.

65. (p. 228) __________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide. A. Strategic alliances; joint ventures; internal development B. Internal development; mergers; acquisitions C. Strategic alliances; mergers; joint ventures D. Mergers; internal development; strategic alliances

B. Internal development; mergers; acquisitions

67. (p. 232) An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. A. golden parachute B. greenmail C. poison pill D. scorched earth

B. greenmail

66. (p. 229) According to Michael Porter: "Theres a tremendous allure to __________. Its the big play, the dramatic gesture. With one stroke of the pen you can add billions to size, get a front page story, and create excitement in markets." A. strategic alliances and joint ventures B. mergers and acquisitions C. internal development D. differentiation strategies

B. mergers and acquisitions

52. (p. 217) In the BCG (Boston Consulting Group) Matrix, a business that has a low market share in an industry characterized by high market growth is termed a A. star. B. question mark. C. cash cow. D. dog.

B. question mark.

63. (p. 228) All of the following are guidelines for managing strategic alliances EXCEPT A. establishing a clear understanding between partners. B. relying primarily on a contract to make the joint venture work. C. not shortchanging your partner. D. working hard to ensure a collaborative relationship between partners.

B. relying primarily on a contract to make the joint venture work.

61. (p. 227) A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of A. joint diversification. B. strategic alliance. C. divestment. D. global integration.

B. strategic alliance.

55. (p. 217) In managing a firm's portfolio, the BCG matrix would suggest that A. "dogs" should be invested in to increase market share and become cash cows. B. "stars" are in low growth markets and can provide excess cash to fund other opportunities. C. "question marks"; can represent future "stars"; if their market share is increased. D. "cash cows"; require substantial cash outlays to maintain market share.

C. "question marks"; can represent future "stars"; if their market share is increased.

50. (p. 216) Portfolio management matrices are applied to what level of strategy? A. Departmental level B. Business level C. Corporate level D. International level

C. Corporate level

70. (p. 232) Antitakeover tactics include all of the following EXCEPT A. greenmail. B. golden parachutes. C. golden handcuffs. D. poison pills.

C. golden handcuffs.

59. (p. 223-224) The downsides or limitations of mergers and acquisitions include all of the following EXCEPT: A. expensive premiums that are frequently paid to acquire a business. B. difficulties in integrating the activities and resources of the acquired firm into a corporations on-going operations. C. it is a slow means to enter new markets and acquire skills and competences. D. there can be many cultural issues that can doom an otherwise promising acquisition.

C. it is a slow means to enter new markets and acquire skills and competences.

57. (p. 218) All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT A. every business cannot be accurately measured and compared on the two dimensions. B. it views each business as a stand-alone entity and ignores the potential for synergies across businesses. C. it takes a dynamic view of competition which can lead to overly complex analyses. D. while easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.

C. it takes a dynamic view of competition which can lead to overly complex analyses.

60. (p. 225) Divesting businesses can accomplish many different objectives, including A. enabling managers to focus their efforts more directly on the firms core businesses. B. providing the firm with more resources to spend on more attractive alternatives. C. raising cash to help fund existing businesses. D. all of these.

D. all of these.

62. (p. 226) Cooperative relationships such as __________ have the potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies. A. joint ventures B. mergers and acquisitions C. strategic alliances D. both joint ventures and strategic alliances

D. both joint ventures and strategic alliances

56. (p. 217) In the Boston Consulting Groups (BCG) Growth Share Matrix, the suggested strategy for "stars"; is to A. milk them to finance other businesses. B. invest large sums to gain a good market share. C. not invest in them and to shift cash flow to other businesses. D. maintain position and after the market growth slows use the business to provide cash flow.

D. maintain position and after the market growth slows use the business to provide cash flow.

69. (p. 232) The term "golden parachutes" refers to A. a clause requiring that huge dividend payments be made upon takeover. B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition. D. pay given to executives fired because of a takeover.

D. pay given to executives fired because of a takeover.

51. (p. 217) When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a A. cow. B. dog. C. problem child. D. star.

D. star.

68. (p. 189) As markets mature, A. costs continue to increase. B. application for patents increase. C. differentiation opportunities increase. D. there is increasing emphasis on efficiency.

D. there is increasing emphasis on efficiency.

64. (p. 189) The growth stage of the industry life cycle is characterized by A. "in-kind"; competition (from the same type of product). B. premium pricing. C. a growing trend to compete on the basis of price. D. retaliation by competitors whose customers are stolen.

A. "in-kind"; competition (from the same type of product).

66. (p. 265) According to studies by Rugman and Verbeke, approximately how many of the world's largest 500 firms are global, that is, they have at least 20% of their total revenues each in North America, Asia, and Europe? A. 9 B. 59 C. 79 D. 159

A. 9

36. (p. 206) __________ reflect(s) the collective learning in organizations such as how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services. A. Primary value chain activities B. Culture C. Core competencies D. Horizontal integration

C. Core competencies

51. (p. 264) Software Tech, Inc., a company in the computer software industry, invests heavily in R&D and product design. Thus, most of its value is added A. upstream. B. in its infrastructure. C. downstream. D. midstream.

A. upstream.

41. (p. 168-169) Which of the following is a risk (or potential pitfall) of cost leadership? A. Cost cutting may lead to the loss of desirable features. B. Attempts to stay ahead of the competition may lead to gold plating. C. Cost differences increase as the market matures. D. Producers are more able to withstand increases in suppliers' cost.

A. Cost cutting may lead to the loss of desirable features.

43. (p. 170) Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. Differentiation. B. Overall cost leadership. C. Differentiation focus. D. Stuck-in- the middle.

A. Differentiation.

48. (p. 174) Which statement regarding competitive advantages is true? A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer. B. With an overall cost leadership strategy, firms need not be concerned with parity on differentiation. C. In the long run, a business with one or more competitive advantages is probably destined to earn normal profits. D. Attaining multiple types of competitive advantage is a recipe for failure.

A. If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.

40. (p. 168) Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. Overall cost leadership. B. Differentiation. C. Differentiation focus. D. Cost leadership focus.

A. Overall cost leadership.

47. (p. 214-215) __________ is when a firm's corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. A. Parenting B. Restructuring C. Leveraging core competencies D. Increasing market power

A. Parenting

71. (p. 268-269) The difference between a franchise and licensing contract is that A. a franchise contract is more specific and usually longer in duration. B. a franchise contract must include a foreign government. C. a licensing contract covers more aspects of operations. D. a franchise contract involves less control and less risk.

A. a franchise contract is more specific and usually longer in duration.

33. (p. 205) McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of A. achieving economies of scope through related diversification. B. achieving market power through related diversification. C. attaining the benefits of restructuring through unrelated diversification. D. attaining the benefits of parenting through unrelated diversification.

A. achieving economies of scope through related diversification.

49. (p. 174-175) A narrow market focus is to a differentiation-based strategy as a A. broadly-defined target market is to a cost leadership strategy. B. growth market is to a differentiation-based strategy. C. growth market is to a cost-based strategy. D. technological innovation is to a cost-based strategy.

A. broadly-defined target market is to a cost leadership strategy.

54. (p. 260) Recent trends that might lead managers of multinational corporations (MNCs) to adopt a more decentralized strategy for their operations would include all of the following EXCEPT A. customers; needs, interests, and tastes are becoming increasingly homogenized or similar. B. consumers around the world are increasingly willing to tradeoff idiosyncratic preferences in product features for lower price. C. flexible manufacturing trends have allowed a decline in the minimum volume required to reach acceptable levels of production efficiency. D. fluctuating exchange rates.

A. customers needs, interests, and tastes are becoming increasingly homogenized or similar.

40. (p. 249) All of the following would be viewed as advantages of global diversification EXCEPT A. fewer social and political risks than domestic operations. B. a firm not being solely dependent on the domestic market. C. a firm with large margins at home helping subsidize its operations in other nations. D. the potential to lower costs of operation even if the primary market is at home.

A. fewer social and political risks than domestic operations.

49. (p. 257-258) Low pressure for local adaptation combined with low pressure for lower costs would suggest what type of strategy? A. international B. global C. multidomestic D. transnational

A. international

63. (p. 187) In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. introduction B. growth C. maturity D. decline

A. introduction

46. (p. 171) A differentiation strategy enables a business to address the five competitive forces by A. lessening competitive rivalry by distinguishing itself. B. having brand-loyal customers become more sensitive to prices. C. increasing economies of scale. D. serving a broader market segment.

A. lessening competitive rivalry by distinguishing itself.

44. (p. 214) It may be advantageous to vertically integrate when A. lower transaction costs and improved coordination are vital and achievable through vertical integration. B. the minimum efficient scales of two corporations are different. C. flexibility is reduced, providing a more stationary position in the competitive environment. D. various segregated specializations will be combined.

A. lower transaction costs and improved coordination are vital and achievable through vertical integration.

38. (p. 207) Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that A. the similarity required for sharing core competencies must be in the value chain, not in the product. B. the products use similar distribution channels. C. the target market is the same, even if the products are very different. D. the methods of production are the same.

A. the similarity required for sharing core competencies must be in the value chain, not in the product.

46. (p. 214) Vertical integration is attractive when A. transaction costs are higher than internal administrative costs. B. internal administrative costs are higher than transaction costs. C. transaction costs and internal administrative costs are equal. D. search costs are higher than monitoring costs.

A. transaction costs are higher than internal administrative costs.

44. (p. 171) High product differentiation is generally accompanied by A. higher market share. B. decreased emphasis on competition based on price. C. higher profit margins and lower costs. D. significant economies of scale.

B. decreased emphasis on competition based on price.

43. (p. 247) The sale of Boeing's commercial aircraft and Microsoft's operating systems in many countries enable these companies to benefit from A. higher prices in their domestic markets. B. economies of scale. C. optimizing the location for many activities in their value chain. D. reducing their exposure to currency risks.

B. economies of scale.

56. (p. 183) Which of the following is NOT one of the ways the Internet is lowering transaction costs? A. eliminating supply chain intermediaries B. evaluating employee performance C. minimizing office expenses D. reducing business travel

B. evaluating employee performance

67. (p. 267) Which of the following describes the most typical order of entry into foreign markets? A. franchising, licensing, exporting, joint venture, and wholly owned subsidiary B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary C. licensing, exporting, franchising, joint venture, and wholly owned subsidiary D. exporting, franchising, licensing, joint venture, and wholly owned subsidiary

B. exporting, licensing, franchising, joint venture, and wholly owned subsidiary

73. (p. 192) During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly. A. maintaining B. harvesting C. exiting D. consolidating

B. harvesting

41. (p. 212) The risks of vertical integration include all of the following EXCEPT A. costs and expenses associated with increased overhead and capital expenditures. B. lack of control over valuable assets. C. problems associated with unbalanced capacities along the value chain. D. additional administrative costs associated with managing a more complex set of activities.

B. lack of control over valuable assets.

50. (p. 174) A firm following a focus strategy A. must focus on governmental regulations. B. must focus on a market segment or group of segments. C. must focus on the rising cost of inputs. D. must avoid entering international markets.

B. must focus on a market segment or group of segments.

60. (p. 185) One of the reasons the Internet is eroding sustainable competitive advantages is A. incumbent firms are entering market segments that they previously considered to be too small. B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage. C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success. D. firms are ignoring opportunities to offer high-end services in niche markets.

B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.

36. (p. 164) Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? A. differentiation B. overall cost leadership C. differentiation focus D. stuck-in- the-middle

B. overall cost leadership

37. (p. 165) A manufacturing business pursuing cost leadership will likely A. focus on a narrow market segment. B. rely on experience effects to raise efficiency. C. use advertising to build brand image. D. put heavy emphasis on product engineering.

B. rely on experience effects to raise efficiency.

38. (p. 165) One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by A. hiring more experienced personnel. B. repeating a process until a task becomes easier. C. spreading out a given expense or investment over a greater volume. D. competing in an industry for a long time.

B. repeating a process until a task becomes easier.

39. (p. 208) When management uses common production facilities or purchasing procedures to distribute different but related products, they are A. building on core competencies. B. sharing activities. C. achieving process gains. D. using portfolio analysis.

B. sharing activities.

55. (p. 178-179) All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT: A. firms that fail to attain both strategies may end up with neither and become "stuck-in- the- middle." B. targeting too large a market that causes unit costs to increase. C. underestimating the challenges and expenses associated with coordinating value-creating activities in the extended value chain. D. miscalculating sources of revenue and profit pools in the firm's industry.

B. targeting too large a market that causes unit costs to increase.

59. (p. 260-261) All of the following are limitations of a global strategy EXCEPT A. limited ability to adapt to local markets. B. the ability to locate activities in optimal locations. C. the concentration of activities may increase dependence on a single facility. D. single locations may lead to higher tariffs and transportation costs.

B. the ability to locate activities in optimal locations.

57. (p. 259) As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by A. increased freedom of individual business units to adapt to local tastes. B. the creation of a worldwide network to achieve consistent service regardless of location. C. flexibility in applying R&D to meet country-specific needs. D. tailoring products to meet country-specific needs.

B. the creation of a worldwide network to achieve consistent service regardless of location.

42. (p. 248) Microsoft decided to establish a corporate research laboratory in Cambridge, England A. because England is an ally of the United States. B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities. C. because the local language is English. D. because the company views the United States as a risky place to expand due to the actions of the U.S. Department of Justice.

B. to access the outstanding technical and professional talent available there so that they can attain world-class excellence in selected value-creating activities.

63. (p. 264) Units coordinate their activities with headquarters and with one another, units adapt to special circumstances only they face, and the entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy? A. global B. transnational C. international D. multidomestic

B. transnational

31. (p. 201) Corporate-level strategy addresses two related issues: A. how to compete in a given business; the application of technology. B. what businesses to compete in; how these businesses can achieve synergy. C. how to integrate primary activities; increase shareholder wealth. D. how to improve a firm's infrastructure; how to maintain ethical behavior.

B. what businesses to compete in; how these businesses can achieve synergy.

70. (p. 189) Which of the following is most often true of mature markets? A. Some competitors enjoy a significant operating advantage due to increasing experience effects. B. The market supports premium pricing, which attracts additional competitors. C. Advantages that cannot be duplicated by other competitors are difficult to achieve. D. The magnitude of pricing differences and product differentiation is larger than in the growth stage.

C. Advantages that cannot be duplicated by other competitors are difficult to achieve.

61. (p. 187) Which of these statements regarding the industry life cycle is correct? A. Part of the power of the market life cycle is its ability to serve as a short-run forecasting device. B. Trends suggested by the market life cycle model are generally not reversible or repeatable. C. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives. D. It points out the need to maintain a differentiation advantage and a low cost advantage simultaneously.

C. It has important implications for a firm's generic strategies, functional areas, value-creating activities, and overall objectives.

46. (p. 254) __________ occurs when a firm decides to utilize other firms to perform value- creating activities that were previously performed in-house. A. Offshoring B. A global strategy C. Outsourcing D. A transnational strategy

C. Outsourcing

45. (p. 171) Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position vis-à- vis Porter's five forces? A. By increasing a firm's margins, it avoids the need for a low cost position. B. It helps a firm to deal with supplier power and reduces buyer power since buyers lack comparable alternatives. C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs. D. Firms will enjoy high customer loyalty, thus experiencing less threat from substitutes than its competitors.

C. Supplier power is increased because suppliers will be able to charge higher prices for their inputs.

64. (p. 265) Which of the following is a disadvantage of a transnational strategy? A. Less ability to realize cost savings through scale economies. B. Limited ability to adapt to local markets. C. Unique managerial challenges in fostering knowledge transfer. D. Single locations may lead to higher tariffs and transportation costs.

C. Unique managerial challenges in fostering knowledge transfer.

47. (p. 172-174) All of the following are potential pitfalls of a differentiation strategy EXCEPT: A. uniqueness that is not valuable. B. too high a price premium. C. all rivals share a common input or raw material. D. perceptions of differentiation may vary between buyers and sellers.

C. all rivals share a common input or raw material.

68. (p. 268) A domestic corporation considering expanding into international markets for the first time will typically A. start off by implementing a wholly owned foreign subsidiary so it can maintain standards identical to those at home. B. consider licensing or franchising its operations. C. consider implementing a low risk/low control strategy such as exporting. D. form a joint venture with a reputable foreign producer.

C. consider implementing a low risk/low control strategy such as exporting.

60. (p. 260) Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by A. flexibility in adjusting to local laws and customs. B. decreased duplication of inventories which are often involved in having multiple plants producing similar products. C. decreased shipping and transportation costs inherent in local production. D. economies of scale gained through centralized production of standardized products.

C. decreased shipping and transportation costs inherent in local production.

41. (p. 248) Optimizing the location of every activity in the value chain can yield all of the following strategic advantages EXCEPT A. performance enhancement. B. cost reduction. C. extending the life cycle of the product of service. D. risk reduction.

C. extending the life cycle of the product of service.

74. (p. 193) Research shows that the following are all strategies used by firms engaged in successful turnarounds EXCEPT A. asset and cost surgery. B. selective product and market pruning. C. global expansion. D. piecemeal productivity improvements.

C. global expansion.

42. (p. 212) Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with A. strategic alliances. B. divestment. C. vertical integration. D. horizontal integration.

C. vertical integration.

35. (p. 241) The reasons that explain why some governments make better use of the inflows from foreign investment and know-how than others include all of the following EXCEPT A. governmental practices that are business-friendly. B. local entrepreneurs that can train workers and invest in modern technology. C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions. D. sound management of broader economic factors such as interest rates and inflation.

C. high tariffs and taxes on foreign investors and multinational corporations provide income to improve living conditions.

45. (p. 252) Appreciation of the U.S. dollar will have the following impact on McDonald's: A. lower sales abroad because foreign customers cannot afford McDonalds' products. B. more transfer of ingredients from the U.S. to branches abroad to take advantage of the higher dollar. C. lower profits, because foreign profits will be reduced when measured in dollars. D. no impact at all.

C. lower profits, because foreign profits will be reduced when measured in dollars.

65. (p. 188) In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. introduction B. growth C. maturity D. decline

C. maturity

66. (p. 189) In a given market, key technology no longer has patent protection, experience is not an advantage, and there is a growing need to compete on price. What stage of its life cycle is the market in? A. introduction B. growth C. maturity D. decline

C. maturity

67. (p. 189) A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage? A. introduction B. growth C. maturity D. decline

C. maturity

69. (p. 189) The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle? A. introduction B. growth C. maturity D. decline

C. maturity

38. (p. 244) According to Michael Porter, firms that have experienced intense domestic competition are A. unlikely to have the time or resources to compete abroad. B. most likely to design strategies aimed primarily at the domestic market. C. more likely to design strategies and structures that allow them to successfully compete abroad. D. more likely to demand protection from their governments.

C. more likely to design strategies and structures that allow them to successfully compete abroad.

42. (p. 169) A firm can achieve differentiation through all of the following means EXCEPT A. improving brand image. B. better customer service. C. offering lower prices to frequent customers. D. adding additional product features.

C. offering lower prices to frequent customers.

54. (p. 177) A __________ can be defined as the total profits in an industry at all points along the industry's value chain. A. profit maximizer B. revenue enhancer C. profit pool D. profit outsourcing

C. profit pool

65. (p. 263-264) In order to realize the strongest competitive advantage, firms engaged in worldwide competition must A. require that all of their various business units follow the same strategy regardless of location. B. ensure that all business units follow a strategy strictly tailored to their respective locations. C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results. D. attempt to use the strategy that was most successful in their home country.

C. pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results.

70. (p. 268) Fees that a multinational receives from a foreign licensee in return for its use of intellectual property (trademark, patent, trade secret, technology) are usually called A. transfer prices. B. dividends. C. royalties. D. intra-corporate inflows.

C. royalties.

61. (p. 263) All of the following are limitations of a multidomestic strategy EXCEPT A. less ability to realize cost savings through scale economies. B. greater difficulty in transferring knowledge across countries. C. single locations may lead to higher tariffs and transportation costs. D. may lead to "overadaptation" as conditions change.

C. single locations may lead to higher tariffs and transportation costs.

37. (p. 244) Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries. A. weak; weak; high B. strong; strong; low C. strong; strong; high D. weak; weak; low

C. strong; strong; high

39. (p. 245) All of the factors below have made India's software services industry extremely competitive on a global scale EXCEPT A. large pool of skilled workers. B. large network of public and private educational institutions. C. tax and antitrust legislation that protect the dominant players in the industry. D. large, growing market and sophisticated customers.

C. tax and antitrust legislation that protect the dominant players in the industry.

56. (p. 259) Gillette's worldwide success with its Sensor razor demonstrates A. the importance of merging global and multidomestic strategies. B. the values of establishing joint ventures with several multinational corporations. C. that a global marketing effort can sometimes be successful. D. the usefulness of a multidomestic strategy.

C. that a global marketing effort can sometimes be successful.

62. (p. 263) High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy? A. global B. multidomestic C. transnational D. differentiation

C. transnational

52. (p. 264) Industries in which proportionally more value is added in __________ activities are more likely to benefit from a __________ strategy. A. downstream; global B. upstream; multidomestic C. upstream; global D. manufacturing; multidomestic

C. upstream; global

40. (p. 210) Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of A. leveraging core competencies. B. sharing activities. C. vertical integration. D. pooled negotiating power.

C. vertical integration.

53. (p. 264) Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy? A. Firms that compete in industries in which consumer preferences vary substantially in each country. B. Firms in industries that are expanding very rapidly. C. Firms in industries that have value added by sales and marketing departments. D. Firms in industries that have much value added in research and design or manufacturing.

D. Firms in industries that have much value added in research and design or manufacturing

47. (p. 255-256) Which one of the following is one of Theodore Levitt's assumptions supporting a pure global strategy? A. Consumers are willing to pay more for specific product features. B. Customer needs and interests are becoming more dissimilar. C. If the world markets are treated as heterogeneous, substantial economies of scale are easily achieved. D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers.

D. MNCs can compete with aggressive pricing on low cost products that meet the common needs of global consumers.

62. (p. 187) Which of the following statements about the introduction stage of the market life cycle is TRUE? A. It produces relatively large, positive cash flows. B. Strong brand recognition seldom serves as an important switching cost. C. Market share gains by pioneers are usually easily sustained for many years. D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.

D. Products or services offered by pioneers may be perceived as differentiated simply because they are new.

37. (p. 206-207) For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? A. The competence must help the business gain strength relative to its competition. B. The new business must be similar to existing businesses to benefit from a core competence. C. The collection of competencies should be unique, so that they cannot be easily imitated. D. The new business must have an established large market share.

D. The new business must have an established large market share.

74. (p. 271) __________ are most appropriate where a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries. A. Joint ventures B. Strategic alliances C. Licensing agreements D. Wholly owned subsidiaries

D. Wholly owned subsidiaries

59. (p. 184) Which of the following phrases best completes this sentence: Because of the Internet, firms that use a focus strategy have new opportunities to A. respond quickly to customer requests. B. provide more services and features. C. access markets less expensively. D. access niche markets in a highly specialized fashion.

D. access niche markets in a highly specialized fashion.

35. (p. 161) The primary aim of strategic management at the business level is A. maximizing risk-return tradeoffs through diversification. B. achieving a low cost position. C. maximizing differentiation of products and/or services. D. achieving competitive advantage(s).

D. achieving competitive advantage(s).

45. (p. 213) Transaction costs include all of the following costs EXCEPT A. search costs. B. negotiating costs. C. monitoring costs. D. agency costs.

D. agency costs.

34. (p. 241) A major trend in international developments includes A. greater international trade and operations. B. a growing recognition of an international managerial perspective. C. a large increase in international investment. D. all of these.

D. all of these.

35. (p. 205) The corporate office of Cooper Industries adds value to its acquired businesses by performing such activities as auditing their manufacturing operations, improving their accounting activities, and centralizing union negotiations. This is an example of A. achieving economies of scope through related diversification. B. achieving market power through related diversification. C. attaining the benefits of horizontal integration. D. attaining the benefits of parenting through unrelated diversification.

D. attaining the benefits of parenting through unrelated diversification.

49. (p. 215) According to the text, corporate restructuring includes A. capital restructuring, asset restructuring, and technology restructuring. B. global diversification, capital restructuring, and asset restructuring. C. management restructuring, financial restructuring, and procurement restructuring. D. capital restructuring, asset restructuring, and management restructuring.

D. capital restructuring, asset restructuring, and management restructuring.

71. (p. 191) In the __________ stage of the industry life cycle, there are few segments, the emphasis on process design is low, and the major functional areas of concern are general management and finance. A. introduction B. growth C. maturity D. decline

D. decline

72. (p. 191) The most likely time to pursue a harvest strategy is in a situation of A. high growth. B. strong competitive advantage. C. mergers and acquisitions. D. decline in the market life cycle.

D. decline in the market life cycle.

53. (p. 176-178) The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. These are the following EXCEPT A. automated and flexible manufacturing systems. B. exploiting the profit pool concept for competitive advantage. C. coordinating the "extended" value chain by way of information technology. D. deriving benefits from highly focused and high technology markets.

D. deriving benefits from highly focused and high technology markets.

75. (p. 193) Piecemeal productivity improvements during a turnaround typically does NOT involve A. business process reengineering. B. increased capacity utilization. C. benchmarking. D. expansion of a firm's product market scope.

D. expansion of a firm's product market scope.

69. (p. 267) The form of entry strategy into international operations that offers the lowest level of control would be A. franchising. B. licensing. C. joint venture. D. exporting.

D. exporting.

52. (p. 163) Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform A. at about the same level as firms that achieve either cost or differentiation advantages. B. about the same as firms that are "stuck-in- the-middle." C. lower than firms that achieve differentiation advantages but higher than firms that achieve cost advantages. D. higher than firms that achieve either a cost or a differentiation advantage.

D. higher than firms that achieve either a cost or a differentiation advantage.

58. (p. 183) Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. celebrity endorsements B. prestige packaging C. exceptional service D. mass customization

D. mass customization

57. (p. 183) Dell Computer has an online ordering system that allows consumers to configure their own computers before Dell builds them. This capability is an example of A. electronic data interchange. B. knowledge management. C. collaborative design. D. mass customization.

D. mass customization.

36. (p. 242) Michael Porter's framework all of the following factors affect a nation's competitiveness EXCEPT A. factor conditions. B. demand characteristics. C. related and supported industries. D. policies that protect the nation's domestic competitors.

D. policies that protect the nation's domestic competitors.

55. (p. 259) Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, R&D, and marketing activities in __________ locations. A. a wide variety of; several B. a wide variety of; few C. standardized; several D. standardized; few

D. standardized; few

43. (p. 213) A firm should consider vertical integration when A. the competitive situation is highly volatile. B. customer needs are evolving. C. the firm's suppliers willingly cooperate with the firm. D. the firm's suppliers of raw materials are often unable to maintain quality standards.

D. the firm's suppliers of raw materials are often unable to maintain quality standards.

58. (p. 260) All of the following are risks associated with a global strategy EXCEPT A. a firm with only one manufacturing location must export its product—some of which may be a great distance from the operation. B. the geographic concentration of any activity may also tend to isolate that activity from the targeted markets. C. concentrating an activity in a single location makes the rest of the firm dependent on that location. D. the pressures for local adaptation may elevate the firm's cost structure.

D. the pressures for local adaptation may elevate the firm's cost structure.

44. (p. 248) Many U.S. multinational companies set up maquiladora operations south of the U.S.-Mexico border primarily A. to sell products into the growing Mexican market. B. as part of US government-initiated measures to discourage illegal immigration. C. to take advantage of the lower tax rates in Mexico. D. to take advantage of the low cost of labor.

D. to take advantage of the low cost of labor.