Question 1

If a strategic business unit is recognized as a cash cow,it is advisable to

Accepted Answer

A)  harvest the business. 
B)  invest into the business to hold its current position. 
C)  divest the business due to its low market share. 
D)  maintain it till it turns into a dog. 
A)  harvest the business. 
B)  invest into the business to hold its current position. 
C)  divest the business due to its low market share. 
D)  maintain it till it turns into a dog.

Question 2

A firm that engages in strategic outsourcing typically

Accepted Answer

A)  increases its internal transaction costs. 
B)  reduces its level of vertical integration. 
C)  reduces its level of external transaction costs. 
D)  increases its level of horizontal integration. 
A)  increases its internal transaction costs. 
B)  reduces its level of vertical integration. 
C)  reduces its level of external transaction costs. 
D)  increases its level of horizontal integration.

Question 3

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

Accepted Answer

A)  industry 
B)  functional department 
C)  economy 
D)  customer segment 
A)  industry 
B)  functional department 
C)  economy 
D)  customer segment

Question 4

Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy,a natural gas company?

Accepted Answer

A)  taper integration strategy 
B)  differentiation strategy 
C)  related diversification strategy 
D)  cost-leadership strategy 
A)  taper integration strategy 
B)  differentiation strategy 
C)  related diversification strategy 
D)  cost-leadership strategy

Question 5

A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy.

Accepted Answer

A)  conglomerate 
B)  single-business firm 
C)  parent company 
D)  subsidiary 
A)  conglomerate 
B)  single-business firm 
C)  parent company 
D)  subsidiary

Question 6

Which of the following firms is least integrated?

Accepted Answer

A)  a firm that enters a joint venture with another company to develop a new technology 
B)  a firm that owns production subsidiaries across the globe 
C)  a firm that makes equity investments in its supplier's company 
D)  a firm that buys all the required raw materials from multiple external vendors 
A)  a firm that enters a joint venture with another company to develop a new technology 
B)  a firm that owns production subsidiaries across the globe 
C)  a firm that makes equity investments in its supplier's company 
D)  a firm that buys all the required raw materials from multiple external vendors

Question 7

Divina Pharma Inc.and MF Electronics Inc.have together invested and created a new organization,FirstHealth Inc.,to focus on developing diagnostic devices.Through this new firm,both companies are attempting to combine their core competencies to innovate and reduce their risks associated with transaction-specific investments.However,the new organization operates independent of Divina Pharma and MF Electronics.Which of the following alternatives to integration does this scenario best illustrate?

Accepted Answer

A)  a joint venture 
B)  a franchisee 
C)  a licensing contract 
D)  a corporate acquisition 
A)  a joint venture 
B)  a franchisee 
C)  a licensing contract 
D)  a corporate acquisition

Question 8

Which of the following best illustrates physical-asset specificity?

Accepted Answer

A)  a unique training program developed in an organization 
B)  a ship container designed to carry more than the average load of iron ore 
C)  a generic machine that can be used to churn different mixtures 
D)  a machine solely designed to give a candy its trademarked shape 
A)  a unique training program developed in an organization 
B)  a ship container designed to carry more than the average load of iron ore 
C)  a generic machine that can be used to churn different mixtures 
D)  a machine solely designed to give a candy its trademarked shape

Question 9

How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies?

Accepted Answer

A)  by using internal capital markets as a source of value creation 
B)  by adding more unrelated businesses into its corporate portfolio 
C)  by increasing its coordination and influence costs 
D)  by investing in businesses under the question mark quadrant of the BCG matrix 
A)  by using internal capital markets as a source of value creation 
B)  by adding more unrelated businesses into its corporate portfolio 
C)  by increasing its coordination and influence costs 
D)  by investing in businesses under the question mark quadrant of the BCG matrix

Question 10

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

Accepted Answer

A)  It allows the conglomerate to overcome institutional weaknesses in emerging economies. 
B)  It allows the conglomerate to form a monopoly in emerging economies. 
C)  It allows the conglomerate to use well-defined legal systems in emerging economies. 
D)  It allows the conglomerate to take advantage of strong capital markets in emerging economies. 
A)  It allows the conglomerate to overcome institutional weaknesses in emerging economies. 
B)  It allows the conglomerate to form a monopoly in emerging economies. 
C)  It allows the conglomerate to use well-defined legal systems in emerging economies. 
D)  It allows the conglomerate to take advantage of strong capital markets in emerging economies.

Question 11

Symphon Times Inc.,a Swiss-based premium watch brand,has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations.Which of the following types of diversification strategies is the firm pursuing?

Accepted Answer

A)  product diversification strategy 
B)  process diversification strategy 
C)  geographic diversification strategy 
D)  product-market diversification strategy 
A)  product diversification strategy 
B)  process diversification strategy 
C)  geographic diversification strategy 
D)  product-market diversification strategy

Question 12

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services to lead to competitive advantage.

Accepted Answer

A)  Embargos 
B)  Cartel agreements 
C)  Strategic alliances 
D)  Corporate acquisitions 
A)  Embargos 
B)  Cartel agreements 
C)  Strategic alliances 
D)  Corporate acquisitions

Question 13

Which of the following best illustrates forward vertical integration?

Accepted Answer

A)  A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. 
B)  A chain of ice cream parlors launches a brand of toys and accessories for children. 
C)  A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. 
D)  A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery. 
A)  A firm that manufactures and sells car engines to major automobile companies launches its own line of cars. 
B)  A chain of ice cream parlors launches a brand of toys and accessories for children. 
C)  A multinational coffee chain sources its coffee beans from plantations in Brazil and Vietnam. 
D)  A designer shoe company that previously purchased leather from external suppliers establishes its own leather tannery.

Question 14

_____ is best described as a situation in which one party is more informed than another,because of the possession of private information.

Accepted Answer

A)  Information governance 
B)  Information asymmetry 
C)  Information deregulation 
D)  Information piracy 
A)  Information governance 
B)  Information asymmetry 
C)  Information deregulation 
D)  Information piracy

Question 15

A primary advantage of organizing economic activity within firms is the

Accepted Answer

A)  ability to coordinate highly complex tasks to allow for specialized division of labor. 
B)  low administrative costs because of reduced bureaucracy. 
C)  eradication of the principal-agent problem. 
D)  high-powered incentive to work as salaried employees for an existing firm. 
A)  ability to coordinate highly complex tasks to allow for specialized division of labor. 
B)  low administrative costs because of reduced bureaucracy. 
C)  eradication of the principal-agent problem. 
D)  high-powered incentive to work as salaried employees for an existing firm.

Question 16

The Boston Consulting Group (BCG)growth-share matrix locates a firm's individual strategic business units (SBUs)in which two dimensions?

Accepted Answer

A)  start-up capital required and stage of industry life cycle 
B)  relative market share and speed of market growth 
C)  economic value created and costs incurred 
D)  amount of debt financing and equity financing 
A)  start-up capital required and stage of industry life cycle 
B)  relative market share and speed of market growth 
C)  economic value created and costs incurred 
D)  amount of debt financing and equity financing

Question 17

RoboToys,Inc.is involved in the production of robotic toys.This firm produces the raw materials,including metals and oils for plastic; creates the integrated circuits,displays,and batteries; and assembles the toys.Which of the following stages of the industry value chain is RoboToys involved in?

Accepted Answer

A)  stages 1, 2, and 3 
B)  stages 1, 2, and 4 
C)  stages 2, 3, and 4 
D)  stages 2, 3, and 5 
A)  stages 1, 2, and 3 
B)  stages 1, 2, and 4 
C)  stages 2, 3, and 4 
D)  stages 2, 3, and 5

Question 18

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

Accepted Answer

A)  Cost drivers 
B)  Value drivers 
C)  Specialized assets 
D)  Liquid assets 
A)  Cost drivers 
B)  Value drivers 
C)  Specialized assets 
D)  Liquid assets

Question 19

When a firm is said to be pursuing a geographic diversification strategy,it means that the firm will

Accepted Answer

A)  introduce different products and services in an existing single market. 
B)  sell its products in several different regional, national, and international markets. 
C)  operate from multiple headquarters across the globe. 
D)  depend solely on its in-house facilities for all its production purposes. 
A)  introduce different products and services in an existing single market. 
B)  sell its products in several different regional, national, and international markets. 
C)  operate from multiple headquarters across the globe. 
D)  depend solely on its in-house facilities for all its production purposes.

Question 20

Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies.

Accepted Answer

A)  backward vertical integration 
B)  forward vertical integration 
C)  backward horizontal integration 
D)  forward horizontal integration 
A)  backward vertical integration 
B)  forward vertical integration 
C)  backward horizontal integration 
D)  forward horizontal integration

If a strategic business unit is recognized as a cash cow,it is advisable to

A firm that engages in strategic outsourcing typically

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy,a natural gas company?

A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy.

Which of the following firms is least integrated?

Which of the following best illustrates physical-asset specificity?

How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies?

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

Symphon Times Inc.,a Swiss-based premium watch brand,has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations.Which of the following types of diversification strategies is the firm pursuing?

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services to lead to competitive advantage.

Which of the following best illustrates forward vertical integration?

_____ is best described as a situation in which one party is more informed than another,because of the possession of private information.

A primary advantage of organizing economic activity within firms is the

The Boston Consulting Group (BCG)growth-share matrix locates a firm's individual strategic business units (SBUs)in which two dimensions?

RoboToys,Inc.is involved in the production of robotic toys.This firm produces the raw materials,including metals and oils for plastic; creates the integrated circuits,displays,and batteries; and assembles the toys.Which of the following stages of the industry value chain is RoboToys involved in?

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

When a firm is said to be pursuing a geographic diversification strategy,it means that the firm will

Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies.

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation and Entrepreneurship

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 8: Corporate Strategy: Vertical Integration and Diversification

If a strategic business unit is recognized as a cash cow,it is advisable to

A firm that engages in strategic outsourcing typically

Each stage of the vertical value chain typically represents a distinct _____ in which a number of different firms are competing.

Which of the following corporate strategies did ExxonMobil pursue by acquiring XTO Energy,a natural gas company?

A _____ is best defined as a company that combines two or more strategic business units under one overarching corporation and follows an unrelated diversification strategy.

Which of the following firms is least integrated?

Which of the following best illustrates physical-asset specificity?

How can a firm pursuing a diversification strategy enhance its overall corporate performance by leveraging financial economies?

Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

Symphon Times Inc.,a Swiss-based premium watch brand,has recently started selling its watches through company-owned retail outlets in major cities of the emerging nations.Which of the following types of diversification strategies is the firm pursuing?

_____ are best described as voluntary arrangements between firms that involve the sharing of knowledge,resources,and capabilities with the intent of developing processes,products,or services to lead to competitive advantage.

Which of the following best illustrates forward vertical integration?

_____ is best described as a situation in which one party is more informed than another,because of the possession of private information.

A primary advantage of organizing economic activity within firms is the

The Boston Consulting Group (BCG)growth-share matrix locates a firm's individual strategic business units (SBUs)in which two dimensions?

RoboToys,Inc.is involved in the production of robotic toys.This firm produces the raw materials,including metals and oils for plastic; creates the integrated circuits,displays,and batteries; and assembles the toys.Which of the following stages of the industry value chain is RoboToys involved in?

_____ are best described as unique assets with high opportunity costs that have significantly more value in their intended use than in their next-best use.

When a firm is said to be pursuing a geographic diversification strategy,it means that the firm will

Firms that use taper integration also use _____ when they rely on outside-market firms for some of their supplies.

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation and Entrepreneurship

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters