Question 1

Companies invest in specialized assets because these assets allow them to:

Accepted Answer

A)  lower their cost structure. 
B)  charge excessive prices for their products. 
C)  the materials required are unique. 
D)  develop customized products. 
E)  charge premium prices for their products. 
A)  lower their cost structure. 
B)  charge excessive prices for their products. 
C)  the materials required are unique. 
D)  develop customized products. 
E)  charge premium prices for their products.

Question 2

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Accepted Answer

A) True 
 B)False

Question 3

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

Accepted Answer

A) True 
 B)False

Question 4

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself:

Accepted Answer

A)  locked into an old, inefficient technology. 
B)  able to sell its products at continually lower prices. 
C)  increasing returns on its assets. 
D)  establishing a monopoly in the industry. 
E)  lowering its cost structure. 
A)  locked into an old, inefficient technology. 
B)  able to sell its products at continually lower prices. 
C)  increasing returns on its assets. 
D)  establishing a monopoly in the industry. 
E)  lowering its cost structure.

Question 5

Vertical integration can strengthen a company's differentiation business-level strategy and competitive advantage.

Accepted Answer

A) True 
 B)False

Question 6

Vertical integration is undertaken to support the competitive position of a company's core business.

Accepted Answer

A) True 
 B)False

Question 7

Google bought Clever Sense, a mobile app company. This is an example of a(n):

Accepted Answer

A)  parallel sourcing policy. 
B)  strategic outsource. 
C)  strategic alliance. 
D)  merger. 
E)  acquisition. 
A)  parallel sourcing policy. 
B)  strategic outsource. 
C)  strategic alliance. 
D)  merger. 
E)  acquisition.

Question 8

When a company outsources its noncore activities to specialists, it loses its capabilities to differentiate its final products.

Accepted Answer

A) True 
 B)False

Question 9

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products. Tina's Technologies is utilizing horizontal integration.

Accepted Answer

A) True 
 B)False

Question 10

Vertical integration can be disadvantageous when:

Accepted Answer

A)  competitors are vertically integrated. 
B)  demand is stable. 
C)  industry technology is changing rapidly. 
D)  the company is operating in the home country. 
E)  costs of company decreases. 
A)  competitors are vertically integrated. 
B)  demand is stable. 
C)  industry technology is changing rapidly. 
D)  the company is operating in the home country. 
E)  costs of company decreases.

Question 11

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

Accepted Answer

A) True 
 B)False

Question 12

The final part of the strategy formulation process is:

Accepted Answer

A)  choosing business-level strategies. 
B)  choosing functional-level strategies. 
C)  choosing corporate-level strategies. 
D)  choosing functional-level goals. 
E)  choosing business-level goals. 
A)  choosing business-level strategies. 
B)  choosing functional-level strategies. 
C)  choosing corporate-level strategies. 
D)  choosing functional-level goals. 
E)  choosing business-level goals.

Question 13

When a bank offers home mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Accepted Answer

A) True 
 B)False

Question 14

Horizontal integration almost always increases rivalry in an industry.

Accepted Answer

A) True 
 B)False

Question 15

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Accepted Answer

A) True 
 B)False

Question 16

In a strategic alliance, one company in the agreement benefits more than the other.

Accepted Answer

A) True 
 B)False

Question 17

In which of the following is a firm most likely to lose direct control over value creation activities?

Accepted Answer

A)  Merger 
B)  Acquisition 
C)  Vertical integration 
D)  Strategic alliance 
E)  Outsourcing 
A)  Merger 
B)  Acquisition 
C)  Vertical integration 
D)  Strategic alliance 
E)  Outsourcing

Question 18

Consider the case of a manufacturing firm that purchases subassemblies from a supplier, creates a finished product, and then sells that product to a wholesale distributor. What advantages might this firm gain from forward integration? From backward integration? What potential pitfalls of vertical integration might the firm face?

Accepted Answer

Forward integration would allow the manu

Question 19

Credible commitments refer to:

Accepted Answer

A)  believable promises that support the development of a long-term relationship between companies. 
B)  the merging of two companies that have an equal market share. 
C)  to obtaining of goods, services or works from an external source. 
D)  the acquisition of one company by another company. 
E)  the outsourcing of after-sale services to a different company. 
A)  believable promises that support the development of a long-term relationship between companies. 
B)  the merging of two companies that have an equal market share. 
C)  to obtaining of goods, services or works from an external source. 
D)  the acquisition of one company by another company. 
E)  the outsourcing of after-sale services to a different company.

Question 20

Compare the benefits and risks associated with horizontal and vertical integration. Under what circumstances would a firm prefer one over the other?

Accepted Answer

Horizontal integration has many of the s

Companies invest in specialized assets because these assets allow them to:

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself:

Vertical integration can strengthen a company's differentiation business-level strategy and competitive advantage.

Vertical integration is undertaken to support the competitive position of a company's core business.

Google bought Clever Sense, a mobile app company. This is an example of a(n):

When a company outsources its noncore activities to specialists, it loses its capabilities to differentiate its final products.

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products. Tina's Technologies is utilizing horizontal integration.

Vertical integration can be disadvantageous when:

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

The final part of the strategy formulation process is:

When a bank offers home mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Horizontal integration almost always increases rivalry in an industry.

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

In a strategic alliance, one company in the agreement benefits more than the other.

In which of the following is a firm most likely to lose direct control over value creation activities?

Credible commitments refer to:

Compare the benefits and risks associated with horizontal and vertical integration. Under what circumstances would a firm prefer one over the other?

Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional-Level Strategies

Business-Level Strategy

Business-Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Related and Unrelated Diversification

Corporate Performance, Governance, and Business Ethics

Implementing Strategy Through Organization

Filters

Exam 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Companies invest in specialized assets because these assets allow them to:

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may find itself:

Vertical integration can strengthen a company's differentiation business-level strategy and competitive advantage.

Vertical integration is undertaken to support the competitive position of a company's core business.

Google bought Clever Sense, a mobile app company. This is an example of a(n):

When a company outsources its noncore activities to specialists, it loses its capabilities to differentiate its final products.

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products. Tina's Technologies is utilizing horizontal integration.

Vertical integration can be disadvantageous when:

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

The final part of the strategy formulation process is:

When a bank offers home mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Horizontal integration almost always increases rivalry in an industry.

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

In a strategic alliance, one company in the agreement benefits more than the other.

In which of the following is a firm most likely to lose direct control over value creation activities?

Credible commitments refer to:

Compare the benefits and risks associated with horizontal and vertical integration. Under what circumstances would a firm prefer one over the other?

Strategic Leadership: Managing the Strategy-Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional-Level Strategies

Business-Level Strategy

Business-Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Related and Unrelated Diversification

Corporate Performance, Governance, and Business Ethics

Implementing Strategy Through Organization

Filters