499 exam 2
In managing the corporate portfolio, the BCG matrix would suggest that __________.
Question Marks can represent future Stars if their market share is increased
The difference between a franchise contract and a licensing contract is that ___________.
a franchise contract is more specific and usually longer in duration
A firm following a focus strategy must focus on _____________.
a market segment or group of segments
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 poison pill
In the BCG Matrix, a business that has a low market share in an industry characterized by high market growth is termed a ____________.
question mark
A manufacturing business pursuing cost leadership is likely to _______.
rely on experience effects to raise efficiency
Which of the following is not part of a good guideline list for managing strategic alliances?
relying primarily on a contract to make the joint venture work
One aspect of using a cost leadership strategy is that experience effects may lead to lower costs. Experience effects are achieved by ____________.
repeating a process until a task becomes easier
Which of the following types of international firms are most likely to benefit from a global strategy as opposed to a multidomestic strategy?
firms in industries that have much value added in research and design or manufacturing
Research has consistently shown that firms that achieve both cost leadership and differentiation advantages tend to perform ______________.
higher than firms that achieve either a cost or a differentiation advantage
The size of pricing and differentiation advantages between competitors decreases in which stage of the market life cycle?
maturity
According to Michael Porter, there is a tremendous allure to _________. It is 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.
mergers and acquisitions
The primary means by which a firm can diversify are __________, _________, and ________.
mergers and acquisitions; joint ventures and strategic alliances; internal development
Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide.
mergers, acquisitions
According to Michael Porter, firms that have experienced intense domestic competition are _________________________________.
more likely to design strategies and structures that allow them to successfully compete abroad
High pressure for local adaptation combined with low pressure for lower costs would suggest what type of international strategy?
multidomestic strategy
One of the main reasons the Internet is eroding sustainable competitive advantages is that _______.
nearly all competitors will have greater access to tools for managing costs
Which of the following is not a risk normally associated with Bottom of the Pyramid strategies?
new products may be perceived as exploiting the privileged customer with substandard products
A firm can achieve differentiation through all of the following means EXCEPT ________.
offering lower prices to frequent customers
The term golden parachute refers to _________.
pay given to executives fired because of a takeover
PepsiCo leads Coca-Cola in the Indian market. Why?
pepsico formed a joint venture with two indian companies to introduce its products under their label
A __________ can be defined as the total profits in an industry at all points along the industry value chain.
profit pool
If the U.S. dollar appreciates relative to foreign currency, what is likely to be the result for the U.S. company that has company branches abroad?
profits will decrease, when measured in US dollars
Which of the following is FALSE regarding how a differentiation strategy can help a firm to improve its competitive position relative to the Porter five forces model?
Supplier power is increased, because suppliers will be able to charge higher prices for their inputs.
In order to realize the strongest competitive advantage, firms engaged in worldwide competition must ___________.
pursue a strategy that combines the uniformity of a global strategy and the specificity of a multidomestic strategy in order to achieve optimal results
Which of the following is not a reason for merger and acquisition failures?
the acquisition leads to value creation
As in the case of Siebel Systems (now part of Oracle), elements of a global strategy may facilitate the competitive advantage of differentiation by _______.
the creation of a worldwide network to achieve consistent service regardless or location
Units coordinate their activities with headquarters and with one another. Units adapt to special circumstances only they face. The entire organization draws upon relevant corporate resources. These are all attributes of which type of strategy?
transnational strategy
Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with ___________.
vertical integration
In considering the decision to offshore, which of the following generally is not one of the hidden costs?
wage deflation
__________ are most appropriate when a firm already has the appropriate knowledge and capabilities that it can leverage rather easily through multiple locations in many countries.
wholly owns subsidiaries
A __________ is a business in which a multinational company owns 100 percent of the stock.
wholly owns subsidiary
Which of these statements regarding the industry life cycle is correct?
It has important implications for company generic strategies, functional areas, value-creating activities, and overall objectives.
The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:
It is a slow means to enter new markets and acquire skills and competences.
All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT:
It takes a dynamic view of competition which can lead to overly complex analyses.
Which one of the following is one of the Theodore Levitt assumptions supporting a pure global strategy?
MNCs can successfully compete globally by aggressively pricing products at the sacrifice of product features
Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics?
Grid dimensions are based on external environments and internal capabilities/market positions.
Which statement regarding competitive advantages is true?
If several competitors pursue similar differentiation tactics, they may all be perceived as equals in the mind of the consumer.
Due to the Internet, firms that use a focus strategy have new opportunities to _________.
access niche markets in a highly specialized fashion
The primary aim of strategic management at the business level is __________________.
achieving competitive advantage
Transaction costs include all of the following costs EXCEPT
agency costs
A narrow market focus is to a differentiation-based strategy as a __________________.
broadly-defined target market is to a cost leadership strategy
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?
The new business must have an established large market share.
Atlas Door created competitive advantage by reducing the time to receive and process and order and through installing a just in time logistics operation. Which of the following is not a reason for their favorable position relative to the five forces of industry competition?
The product was easily imitable.
With experience, unit costs of production decline as _________ increases in most industries.
output
__________ occurs when a firm decides to utilize other firms to perform value-creating activities that were previously performed in-house.
outsourcing
According to the text, corporate restructuring includes
capital restructuring, asset restructuring, and management restructuring
Which of the following is not a reason for the possible erosion of company competitive advantage?
company commitment to innovation
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 _____________.
royalties
Diversification initiatives include all of the following except ___________________.
shareholder development
When management uses common production facilities or purchasing procedures to distribute different but related products, they are ________________.
sharing activities
In the Porter Diamond of National Advantage framework which of the following factors does not affect nation competitiveness?
the conditions in the nation governing the nature of foreign rivalry
Which of the following is not a risk associated with a global strategy?
the pressures for local adaptation may elevate the cost structure of the firm
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?
differentiation focus
Divesting of businesses can accomplish many different objectives, except _______.
dispersing manager focus
The sale of Boeing commercial aircraft and Microsoft operating systems in many countries enables these companies to benefit from ____________.
economies of scale
Which of the following is NOT one of the ways the Internet is lowering transaction costs?
evaluating employee performance
Piecemeal productivity improvements during a turnaround typically do NOT involve _______.
expansion of company product market scope
The form of entry strategy into international operations that offers the lowest level of control for the domestic corporation would be _________.
exporting
Which of the following describes the most typical order of entry into foreign markets?
exporting, licensing, franchising, joint venture, and wholly owned subsidiary
Corporate-level strategy focuses on _____________.
gaining long term revenue
Which one of the following explains why so few firms are global?
geographic distance is multiplied by distance in culture, language, religion, and legal and political systems
Research shows that which of the following is not a strategy used by firms engaged in successful turnarounds?
global expansion
When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to lower costs, companies should choose a __________ or __________ in order to compete in the global marketplace.
global strategy; transnational strategy
Antitakeover tactics include all of the following EXCEPT _________.
golden handcuffs
The antitakeover tactic, _______, 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.
greenmail
During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly.
harvesting
The growth stage of the industry life cycle is characterized by
in-kind competition (from the same type of product)
Which of the following is a reason for the rise in regional expansion?
increase in the number of trading blocs and free trade zones
Which of the following is not a reason for the successful turnaround that Ford experienced in 2011 under CEO Mulally?
increasing its manpower across the company
Which would be the appropriate strategy for companies to use to compete in the global marketplace if the marketplace pressure is for lower costs with little pressure for local adaptation?
international strategy
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.
introduction
A domestic corporation considering international expansion for the first time typically will follow which of these paths?
it will implement a low risk-low control strategy such as exporting
Which of the following is not a motivation for a company to pursue international expansion?
it wishes to increase market penetration by developing products for the home market
Cooperative relationships such as __________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusing new technologies.
joint ventures and strategic alliances
__________ entail the creation of a third-party legal entity, whereas __________ do not.
joint ventures; strategic alliances
The risks of vertical integration include all of the following EXCEPT:
lack of control over valuable assets
A differentiation strategy enables a business to address the five competitive forces by ______.
lessening competitive rivalry by distinguishing itself
If a company is considering optimizing the physical location for every activity in the value chain, which of the following is not a possible strategic advantage for that decision?
life-cycle enhancement
Multinational firms are constantly faced with the dilemma of choosing between _______ and __________.
local adaptation; global integration
A Cash Cow, in the BCG framework, refers to a business that has _______________.
low market growth and relatively high market share
In the BCG Growth Share Matrix, the suggested strategy for Stars is to ________.
maintain position and after the market growth slows use the business to provide cash flow
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 _____________.
mass customization
Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies?
mass customization
A market that mainly competes on the basis of price and has stagnant growth is characteristic of what life cycle stage?
maturity
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?
maturity
In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high.
maturity
Which of the following is not a potential pitfall of a focus strategy?
All rivals share a common input or raw material.
Which of the following is most often true of mature markets?
Advantages that cannot be duplicated by other competitors are difficult to achieve.
Which of the following is not a potential pitfall of a differentiation strategy?
All rivals share a common input or raw material.
Which of the following statements regarding internal development as a means of diversification is FALSE?
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
Which of the following is not a potential pitfall of an integrated overall low cost and differentiation strategy?
Firms that target too large a market that causes unit costs to increase.
Which of the following is a risk (or potential pitfall) of cost leadership?
Cost cutting may lead to the loss of desirable features.
Which of the following statements about the introduction stage of the market life cycle is TRUE?
Products or services offered by pioneers may be perceived as differentiated because they are new.
Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce card calculators, digital cameras, and other small electronics. These collective skills are known as _________________.
core competencies
Portfolio management matrices are applied to what level of strategy?
corporate level
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 ______.
customer needs, interests, and tastes becoming increasingly homogenized
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.
decline
The most likely time to pursue a harvest strategy is in a situation of _______.
decline in the market life cycle
High product differentiation is generally accompanied by __________.
decreased emphasis on competition based on price
Elements of a multidomestic strategy may facilitate the competitive advantage of cost leadership by __________.
decreased shipping and transportation costs inherent in local production
The text discusses three approaches to combining overall cost leadership and differentiation competitive advantages. Which of the following is not one of these three approaches?
deriving benefits from highly focused and high technology markets
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?
differentiation
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?
overall cost leadership
Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as ________.
parenting
Creating value within business units can happen 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. This is action is known as ______.
restructuring
Which of the following is not a limitation of a multidomestic strategy?
single locations may lead to higher tariffs and transportation costs
Firms following a global strategy strive to offer __________ products and services as well as locate manufacturing, Research and Development, and marketing activities in a limited number of locations.
standardized
When using a BCG matrix, a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow would be known as a __________.
star
Verizon Wireless and ILS Technology have a _________ whereby Verizon integrates technology developed by ILS to improve its machine-to machine (M2M) data transmission systems. M2M systems allow firms to securely transmit data to and from various devices.
strategic alliance
Rivalry is intense in nations with conditions of __________ consumer demand, __________ supplier bases, and __________ new entrant potential from related industries.
strong; strong; high
Which of the factors below has not made the software services industry in India extremely competitive on a global scale?
tax antitrust legislation that protects the dominant players in the industry
The Cisco acquisition of Pure Digital Technologies, the parent of the Flip video camera, failed because __________________.
the Flip division of Cisco was slow and less responsive to market pressures
Which one of the following is not a limitation of a global strategy?
the ability to locate activities in optimal locations
Sharing core competencies is one of the primary potential advantages of diversification. In order for diversification to be most successful, it is important that _____________.
the similarity required for sharing core competencies must be in the value chain, not in the product
A firm should consider vertical integration when ___________.
the suppliers of raw materials to the firm are often unable to maintain quality standards
As markets mature, ___________.
there is increasing emphasis on efficiency
Vertical integration is attractive when ____________.
transaction costs are higher than internal administrative costs
High pressure for local adaptation combined with high pressure for lower costs would suggest what type of international strategy?
transnational strategy
When firms expand into global markets, they are faced with the choice of reducing costs and/or adapting to the local market. When high pressures exist to adapt locally, companies should choose a __________ or __________ in order to compete in the global marketplace.
transnational strategy; multidomestic strategy
Which of the following is a disadvantage of a transnational strategy?
unique managerial challenges in fostering knowledge transfer
Industries in which proportionally more value is added in __________ activities are more likely to benefit from a global strategy.
upstream
Software Tech, Inc., a company in the computer software industry, invests heavily in Research and Development, and product design. Thus, most of its value is added ________.
upstream
Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input to its manufacturing process. This is an example of _______________.
using related diversification to achieve value by integrating vertically in order to acquire market power
McKesson, a large distribution company, sells many product lines such as pharmaceuticals and liquor through its super warehouses. This is an example of ____________.
using related diversification to achieve value by sharing activities to create economies of scope
At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as superb human resource practices and budgeting systems. This is an example of __________________.
using unrelated diversification to achieve value through restructuring and parenting
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 ______________.
vertical integration
