Topics 6-9

A company pursuing a strategy of vertical integration may expand its operations _________. a) backward into an industry that produces inputs for the company's products. b) by making specialized investments jointly with its competitor. c) by merging with industry competitors. d) by using its capital resources to purchase another company within the industry.

a

Cost reduction pressures can be particularly intense in industries producing _________. a) commodity-type products. b) highly differential products. c) highly customized services. d) goods that have no close substitutes.

a

Customer defection rates are _______. a) an indication of a company's ability to satisfy its customers. b) irrelevant as they are unlikely to impact advertising and marketing costs. c) unlikely to affect sales volumes. d) not affected by cost of products.

a

General organizational competencies are found _________. a) in the skills of a company's top managers. b) at low levels among the workers and other employees in the organization. c) exclusively among technology professionals. d) in feedback given by customers.

a

Miller Brewing was related to Philip Morris's tobacco business because it was possible to create important marketing commonalities: both beer and tobacco are mass market consumer goods in which brand positioning, advertising, and product development skills are crucial to create successful new products. This is an example of which of the following? a) Transferring competencies b) Leveraging competencies c) General organizational competencies d) Organizational design skills

a

Organizational culture is __________. a) the specific collection of values, norms, beliefs, and attitudes that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization. b) the means through which a company assigns employees to specific tasks and roles and specifies how these tasks and roles are to be linked together to increase efficiency, quality, innovation, and responsiveness to customers. c) the process of deciding how a company should create, use, and combine organizational structure, control systems, and culture to pursue a business model successfully. d) the principle that a company should design its hierarchy with the fewest levels of authority necessary to use organizational resources effectively

a

The Amos Ball Printing Company was established in 1866. Currently, Amos Ball V is the CEO and chairman of the board. The company has traditionally used a functional structure. Five years ago, the company branched into online publishing and small-batch printing in addition to its regular large-batch operations. Both new businesses are significantly different in technology and marketing from each other and from Ball's traditional business. Despite the hiring of experienced professionals in these new endeavors, performance continues to be poor and is affecting Ball's overall performance. Which of the following statements is TRUE? a) Amos should consider adopting the multidivisional structure. b) Mr. Ball has insufficient power to change the structure of the organization. c) Restructuring must only be done from a position of strength, so it is necessary to wait until the company's overall performance improves before making radical changes. d) These businesses are too disparate to coordinate within one corporate structure.

a

The ________ tends to work best in smaller firms and those with one product category. a) functional structure b) multidivisional structure c) network d) matrix

a

Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope? a) The strategy requires the head office to evaluate each business unit as a stand-alone operation. b) The strategy allows a company to realize cost economies among business units. c) The strategy requires managers to be aware of the costs of coordination. d) The strategy requires close coordination among different business units.

a

Which of the following strategic control systems do managers use to shape and influence the behavior of employees in face-to-face interactions? a) Personal control b) Output control c) Behavior control d) Input control

a

For a company specializing in assembly, moving into retail and distribution means ________. a) backward integration. b) forward integration. c) horizontal integration. d) related diversification.

b

Learning effects are a result of: a) automation. b) knowledge acquired by doing. c) sound product planning tactics. d) diseconomies of scale.

b

New ventures are likely to be preferred compared to acquisitions when _________. a) entry barriers are high. b) a company's business model is based on using its technology to innovate new kinds of products for related markets. c) it needs to move fast to establish a presence in an industry, commonly an embryonic or growth industry. d) the company must make the huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry

b

Nutrimax, a sports foods manufacturer, has recently expanded its operations to different countries. The company has realized that customers in different countries have different tastes and preferences. So, the company customizes its products based on the country where it's selling. In this scenario, Nutrirnax is most likely to be using ________ strategy. a) global standardization b) localization c) home replication d) transnational

b

Product bundling refers to: a) preparation of products for shipment. b) a complete package of related products. c) an inventory procedure for ensuring effective counting of products. d) a package of unrelated products.

b

Quality can best be thought of as: a) a competency in investigating and identifying needs of customers. b) the attributes that customers perceive as superior in a product. c) product development projects driven by customer needs. d) the quantity of inputs that it takes to produce a given output.

b

Successfully implementing a cost leadership strategy requires _______ a) freedom from constraining rules. b) centralization of authority. c) communication among divisions d) sharing of competencies among divisions.

b

The Mountain Ski Lodge spent $100,000 marketing and advertising its new ski trails and on-site spa. The money used for marketing and advertising can be referred to as: a) variable costs. b) fixed costs. c) ratio costs. d) economies of scale.

b

When there is a minimal need for close long-term cooperation between a company and its suppliers, which of the following strategies is the most appropriate? a) Full integration b) Competitive bidding c) Long-term contracting d) Diversification based on economies of scope

b

Which of the following entry strategies should be used when speed is an important consideration? a) Internal new venture b) Acquisition c) Joint venture d) Unrelated diversification

b

Which of the following factors increases pressures for local responsiveness? a) Uniformity in distribution channels b) Host government demands c) Similarities in customer tastes and preferences d) Competitors that are based in high-cost locations

b

Which strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity? a) A technology acquisition strategy b) Related diversification c) A restructuring strategy d) Total diversification

b

3) Vertical integration can be disadvantageous when __________. a) competitors are vertically integrated. b) demand is stable. c) industry technology is changing rapidly. d) the company is operating in one country.

c

A strategy based on diversification may fail to add value because companies _______. a) seek to achieve differentiation instead of low cost. b) make acquisitions rather than develop new technologies on their own. c) incur bureaucratic costs that exceed the value created by the diversification. d) seek to achieve a low-cost position instead of differentiation.

c

At its simplest level, a joint venture may be thought of as ________. a) a merger of two companies. b) an acquisition of a smaller company by a larger company. c) a form of strategic outsourcing. d) pool of resources by two or more firms to create new business

c

Customer responsiveness can lead to competitive advantage because it can help the firm _________. a) differentiate only b) reduce cost only c) both differentiate and reduce cost d) achieve economies of scale

c

Firms seeking to differentiate particularly need support from the ______ and _______ functions. a) finance; accounting b) engineering; operations c) product R&D; marketing d) management information; finance

c

For a strategic alliance, firms should seek partners that are _________. a) different in terms of vision and agendas. b) known for being opportunistic. c) willing to share costs and risks of product development. d) similar when it comes to capabilities.

c

Innovation __________. a) will increase operating cost only b) will decrease operating cost only c) may increase or decrease operating cost d) has no impact on operating cost

c

One of the primary roles of research and development in achieving superior efficiency is ________. a) facilitating cooperation among functions. b) limiting customer defection rates by building brand loyalty. c) designing products for ease of manufacture. d) instituting training programs to build skills

c

The process of deciding how a company should create, use, and combine organizational structure, processes, control systems, and culture to pursue a business model successfully is referred to as __________. a) organizational behavior. b) organizational norm. c) organizational design. d) organizational ecology.

c

The three methods used to implement a diversification strategy are ________. a) Acquisitions, joint ventures, and divestments. b) Acquisitions, mergers, and buy outs. c) Acquisitions, internal new ventures, and joint ventures. d) Joint ventures, strategic alliances, and long-term contracts.

c

Which of the following is an advantage of franchising? a) It ensures tight control over quality. b) It enables companies to engage in global strategic coordination. c) It involves low development costs and risks. d) It frees companies from the task of monitoring and assisting operations at franchisees.

c

Which of the following statements is true about global standardization strategy? a) It emphasizes product customization to specifically meet customer needs. b) It involves the spreading of production, marketing, and research and development activities of companies to all the location it operates in. c) It makes most sense when there are strong pressures for cost reductions. d) It makes most sense when the pressures for local responsiveness are maximum.

c

Which of the following statements is true about home replication strategy? a) It is usually adopted by companies that face intense cost pressures due to competition. b) It makes most sense when the pressures for local responsiveness are very intense. c) It often involves the head office retaining tight control over marketing and product strategy. d) It often involves decentralizing product development functions such as R&D to different subsidiaries.

c

Economies of scale are: a) unit cost increases associated with learning effects. b) realized when output is reduced to a minimum. c) realized when the selling price is equal to the cost price of the products. d) unit cost reductions associated with a large-scale output.

d

Long-term contracts __________. a) are preferable to vertical integration when it is not feasible to exchange hostages. b) generally result in lower prices than does competitive bidding. c) achieve exactly the same outcomes as vertical integration, but they incur higher bureaucratic costs. d) are a low-cost alternative to vertical integration when it is possible to build cooperative relationships with suppliers

d

Organizations strive to control employees' behavior by linking _________ systems to their control systems. a) disciplinary b) reporting c) administrative d) reward

d

Standardization is a form of _________. a) output control. b) financial control. c) input control d) behavior control.

d

The ________ structure is best for implementing a diversification strategy. a) functional b) matrix c) centralized d) multidivisional

d

When a company performs a value creation activity in a region that is optimal for that activity, wherever in the world that might be, it is trying to capitalize on _________. a) negative feedback loops. b) economies of scope. c) the transnational strategy. d) location economies.

d

Which entry mode gives a multinational the tightest control over foreign operations? a) Licensing b) Franchising c) Entering into a joint venture with a foreign company to set up overseas operations d) Setting up a wholly owned subsidiary

d

__________ refers to unit cost increases associated with a large scale of output. b) Economies of scale c) Learning effects d) Diseconomies of scale e) Mass customization

d