Question 1

Which of the following problems is (are)associated with a strategy of vertical integration?

Accepted Answer

A) An increasing cost structure 
B) Manufacturing disadvantages that arise because of rapidly changing technology 
C) Marketing disadvantages that arise when demand is unpredictable 
D) All of these choices 
E) None of these choices 
A) An increasing cost structure 
B) Manufacturing disadvantages that arise because of rapidly changing technology 
C) Marketing disadvantages that arise when demand is unpredictable 
D) All of these choices 
E) None of these choices D

Question 2

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 E

Question 3

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Accepted Answer

A) True 
 B)False  True

Question 4

Company-specific know-how acquired through training is a specialized asset.

Accepted Answer

A) True 
 B)False

Question 5

A company achieves full integration when it produces all of a particular input needed for its processes or disposes of all of its completed products through its own operations.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Which of the following statements concerning vertical integration is not correct?

Accepted Answer

A) Vertical integration can reduce a company's overall cost of production. 
B) Vertical integration allows a company to circumvent powerful buyers and suppliers. 
C) Vertical integration can be used to protect a company's investments in proprietary technology. 
D) Vertical integration is a means of implementing just-in-time inventory systems when suppliers are unreliable. 
E) Vertical integration facilitates the attainment of economies of scope. 
A) Vertical integration can reduce a company's overall cost of production. 
B) Vertical integration allows a company to circumvent powerful buyers and suppliers. 
C) Vertical integration can be used to protect a company's investments in proprietary technology. 
D) Vertical integration is a means of implementing just-in-time inventory systems when suppliers are unreliable. 
E) Vertical integration facilitates the attainment of economies of scope.

Question 8

Credible commitments

Accepted Answer

A) are believable promises or pledges to support the development of a long-term relationship between companies. 
B) facilitate diversification based on acquisitions and restructuring. 
C) facilitate competitive bidding. 
D) facilitate vertical integration. 
E) reduce the risk of losing proprietary technology to a venture partner and facilitate vertical integration. 
A) are believable promises or pledges to support the development of a long-term relationship between companies. 
B) facilitate diversification based on acquisitions and restructuring. 
C) facilitate competitive bidding. 
D) facilitate vertical integration. 
E) reduce the risk of losing proprietary technology to a venture partner and facilitate vertical integration.

Question 9

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a benefit of horizontal integration?

Accepted Answer

A) Lower cost structure 
B) Increased product differentiation 
C) Replicated business model 
D) Increased bargaining power over suppliers 
E) All of these choices 
A) Lower cost structure 
B) Increased product differentiation 
C) Replicated business model 
D) Increased bargaining power over suppliers 
E) All of these choices

Question 11

Outsourcing

Accepted Answer

A) eliminates the need for a value chain. 
B) reduces the firm's dependence on its value chain. 
C) reorders the steps in a firm's value chain. 
D) moves some value chain activities outside the firm. 
E) strengthens the firm's capabilities in each value chain function. 
A) eliminates the need for a value chain. 
B) reduces the firm's dependence on its value chain. 
C) reorders the steps in a firm's value chain. 
D) moves some value chain activities outside the firm. 
E) strengthens the firm's capabilities in each value chain function.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Horizontal integration may be thought of as

Accepted Answer

A) moving into a new unrelated industry. 
B) giving control to suppliers. 
C) gaining control of distributors. 
D) staying inside the industry in which the company currently operates. 
E) combining functional units within the company. 
A) moving into a new unrelated industry. 
B) giving control to suppliers. 
C) gaining control of distributors. 
D) staying inside the industry in which the company currently operates. 
E) combining functional units within the company.

Question 14

Another name for long-term cooperative relationships between two or more companies who agree to commit resources to develop new products is

Accepted Answer

A) horizontal integration. 
B) outsourcing. 
C) strategic alliance. 
D) joint venture. 
E) vertical integration. 
A) horizontal integration. 
B) outsourcing. 
C) strategic alliance. 
D) joint venture. 
E) vertical integration.

Question 15

A strategy of vertical integration may be a risky strategy for a company to pursue when demand is

Accepted Answer

A) predictable. 
B) stable. 
C) unpredictable. 
D) steadily increasing. 
E) rapidly increasing. 
A) predictable. 
B) stable. 
C) unpredictable. 
D) steadily increasing. 
E) rapidly increasing.

Question 16

Many industries have experienced increased consolidation over the last decade due to an increase in

Accepted Answer

A) strategic alliances. 
B) vertical integration. 
C) horizontal integration. 
D) franchising. 
E) diversification. 
A) strategic alliances. 
B) vertical integration. 
C) horizontal integration. 
D) franchising. 
E) diversification.

Question 17

In today's business environment,mergers and acquisitions are

Accepted Answer

A) rare. 
B) too expensive to undertake. 
C) occurring in many industries. 
D) an inappropriate technique for expanding a company. 
E) none of these choices. 
A) rare. 
B) too expensive to undertake. 
C) occurring in many industries. 
D) an inappropriate technique for expanding a company. 
E) none of these choices.

Question 18

When an intermediate manufacturer moves into final assembly,it is pursuing

Accepted Answer

A) backward integration. 
B) forward integration. 
C) taper integration. 
D) related diversification. 
E) unrelated diversification. 
A) backward integration. 
B) forward integration. 
C) taper integration. 
D) related diversification. 
E) unrelated diversification.

Question 19

When a company stays inside one industry,the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the environment.

Accepted Answer

A) True 
 B)False

Question 20

Strategic outsourcing is the decision to allow one or more of a company's value chain activities or functions to be performed by independent companies.

Accepted Answer

A) True 
 B)False

Which of the following problems is (are)associated with a strategy of vertical integration?

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

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Company-specific know-how acquired through training is a specialized asset.

A company achieves full integration when it produces all of a particular input needed for its processes or disposes of all of its completed products through its own operations.

Which of the following statements concerning vertical integration is not correct?

Credible commitments

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Which of the following is a benefit of horizontal integration?

Outsourcing

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

Horizontal integration may be thought of as

Another name for long-term cooperative relationships between two or more companies who agree to commit resources to develop new products is

A strategy of vertical integration may be a risky strategy for a company to pursue when demand is

Many industries have experienced increased consolidation over the last decade due to an increase in

In today's business environment,mergers and acquisitions are

When an intermediate manufacturer moves into final assembly,it is pursuing

When a company stays inside one industry,the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the environment.

Strategic outsourcing is the decision to allow one or more of a company's value chain activities or functions to be performed by independent companies.

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

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

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

Which of the following problems is (are)associated with a strategy of vertical integration?

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

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Company-specific know-how acquired through training is a specialized asset.

A company achieves full integration when it produces all of a particular input needed for its processes or disposes of all of its completed products through its own operations.

Which of the following statements concerning vertical integration is not correct?

Credible commitments

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Which of the following is a benefit of horizontal integration?

Outsourcing

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

Horizontal integration may be thought of as

Another name for long-term cooperative relationships between two or more companies who agree to commit resources to develop new products is

A strategy of vertical integration may be a risky strategy for a company to pursue when demand is

Many industries have experienced increased consolidation over the last decade due to an increase in

In today's business environment,mergers and acquisitions are

When an intermediate manufacturer moves into final assembly,it is pursuing

When a company stays inside one industry,the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the environment.

Strategic outsourcing is the decision to allow one or more of a company's value chain activities or functions to be performed by independent companies.

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

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

Filters