Deck 6: Planning, Strategy, and Competitive Advantage

Question 1

An organization's level of involvement abroad decreases in a joint venture because the alliance rarely involves capital investment to produce goods or services outside the home country.

Answer 1

False

Question 2

SynVens, a major retail chain in Hungary, is planning to diversify. To accomplish this, it sets up a corporate level strategy which involves

A)outlining the method to be used in the new textile division which will enable the company to be first or second in market share in five years.
B)entering the textiles industry and aiming to be the first or second in market share in this industry in five years.
C)stating the goals of each of the managers in the textile division to help the company become first or second in market share in five years.
D)identifying the work responsibilities of each employee in the textile division and how their work will enable the company to become first or second in market share in five years.

Answer 2

B

Question 3

Managers should attempt to collect and use all available information in the organization's planning process. This emphasizes the ________ aspect of planning.

A)unity
B)flexibility
C)continuity
D)accuracy

Answer 3

D

Question 4

The cluster of decisions that managers make to assist an organization to achieve its goals is known as

A)strategy.
B)scenario planning.
C)organizing.
D)needs assessment.

Question 5

A good plan specifies not only which goals and strategies an organization is committed to but is also accountable for putting the strategies into action to attain the goals.

Question 6

Strategy formulation begins with managers systematically analyzing the factors inside an organization and outside in the global environment that affect the organization's ability to meet its goals now and in the future.

Question 7

The corporate-level plan outlines the specific methods a division, a business unit, or an organization will use to compete effectively against its rivals in an industry.

Question 8

Another name for the business level of the organization is the ________ level.

A)functional
B)department
C)corporate
D)divisional

Question 9

A broad declaration of the organization's overriding purpose, which is intended to identify the organization's products and customer base, as well as to differentiate the organization from its competitors, is known as a ________ statement.

A)business
B)mission
C)strategy
D)position

Question 10

The plan for implementing a new strategy requires the development of new functional strategies.

Question 11

Synergy is obtained by apportioning financial resources among divisions to increase financial returns or spread risks among different businesses.

Question 12

The plan of an organization that contains top management's decisions about the organization's mission, goals, strategy, and structure is an example of a ________-level plan.

A)corporate
B)divisional
C)functional
D)business

Question 13

An intermediate-term plan has a time horizon between five and ten years.

Question 14

An ongoing process in which managers build and refine previous plans and continually modify plans at all levels, corporate, business, and functional, so that they fit together into one broad framework, is known as

A)continuity.
B)flexibility.
C)accuracy.
D)unity.

Question 15

The level of an organization that contains the organization's marketing department, R&D department, and human resources department is the ________ level.

A)functional
B)first-line
C)corporate
D)business

Question 16

Managers pursuing a focused differentiation strategy serve just one or a few segments of the market and aim to make their organization the most differentiated company serving that segment.

Question 17

According to Michael Porter's theory, it is possible for managers to pursue both a low-cost strategy and a differentiation strategy at the same time.

Question 18

A strategic alliance can take the form of a written contract between two or more companies to exchange resources, or it can result in the creation of a new organization.

Question 19

When only one central, guiding plan is put into operation to achieve an organizational goal, the organization is experiencing

A)accuracy.
B)flexibility.
C)unity.
D)continuity.

Question 20

The industries and national markets an organization intends to compete in and the reasons why are specified in a company's ________-level strategy.

A)divisional
B)departmental
C)functional
D)corporate

Question 21

Industries that are characterized by permanent, ongoing, intense competition brought about by advancing technology or changing customer tastes, fads, and fashions are an example of

A)global competition.
B)differentiated competition.
C)focused competition.
D)hypercompetition.

Question 22

A company has a requirement that any manager who receives a gift from any of the company's customers worth more than $25 must report this gift to the company's human resources department. This is an example of a

A)tactical plan.
B)rolling plan.
C)policy.
D)rule.

Question 23

TrueAim, Inc., sets a goal that every product line of the company should be either first or second in its industry in market share. This would be an example of a ________-level strategy.

A)corporate
B)divisional
C)functional
D)business

Question 24

A written set of instructions that describes the series of actions that a manager should take in a specific situation is known as a

A)policy.
B)standing operating procedure.
C)scenario plan.
D)rolling plan.

Question 25

Why is planning considered an important process for managers?

A)It gives a sense of direction and purpose.
B)It ensures only top-level managers make decisions.
C)It creates a time horizon for different planning levels.
D)It identifies which markets to enter or avoid.

Question 26

To determine an organization's mission, managers must first define its

A)vision.
B)strategy.
C)tactics.
D)business.

Question 27

A plan that is updated and changed every year to take into consideration how the organization's external and internal environments have changed is known as a ________ plan.

A)standing
B)short-term
C)rolling
D)single-use

Question 28

Which of the following qualities of an effective plan allows for alterations if the situation changes?

A)continuity
B)unity
C)flexibility
D)accuracy

Question 29

A general guide to action for the managers of an organization is known as a

A)rolling plan.
B)rule.
C)policy.
D)standard operating procedure.

Question 30

While managers at QualityFirst Manufacturing were conducting a SWOT analysis, they concluded that their product line is obsolete and narrow. Their product line would be categorized as a(n)

A)strength.
B)weakness.
C)opportunity.
D)threat.

Question 31

Managers at Ferwn Pvt., Ltd., is number two in market share in the local sports equipment manufacturing industry. As part of its business-level strategy, this company

A)invests in new production facilities to enable it to take over the number one spot.
B)devises a plan of action for managers to help it take over the number one spot.
C)states that it plans to take over the number one spot.
D)develops methods to take over the number one spot.

Question 32

Ace Components, Inc., conducted a SWOT analysis, which determined a major threat by

A)identifying how defects in a product has hurt customer trust.
B)predicting a rise in the cost of manufacturing products using tungsten.
C)identifying a loss in brand name recognition in the eastern United States.
D)predicting low trading volumes and low volatility levels in the stock market.

Question 33

The tool that is used in situations when programmed decision making is appropriate is a ________ plan.

A)standing
B)scenario
C)rolling
D)single-use

Question 34

The organizational strategy that specifies the activities of managers at the departmental level of the organization is a ________-level strategy.

A)functional
B)business
C)corporate
D)divisional

Question 35

The ability of the CEO and top managers to convey to their subordinates a compelling vision of what they want the organization to achieve is known as ________ leadership.

A)calculated
B)strategic
C)planned
D)tactical

Question 36

Managers at Dimensions, Inc., created an effective strategy formulation, which determined that the company has

A)three managers who exceeded expectations and two managers who did not reach quarterly expectations.
B)a strength in R&D, a weakness in product range, and an increasing threat from companies in East Asia.
C)an overall strong business rating in the United States and Canada.
D)a profit margin that steadily increased between 1990 and 2000.

Question 37

A group of managers at Right Stuff, Ltd., analyzes both the internal strengths and weaknesses of their organization as well as the opportunities and threats of the external environment. Which of the following planning exercises does this indicate?

A)mission analysis
B)SWOT analysis
C)functional analysis
D)divisional analysis

Question 38

TDS Corporation updates its five-year plan annually to take into account changing conditions within the organization and in the organization's external environment. Which of the following best explains this plan implemented by TDS Corporation?

A)standing plan
B)short-term plan
C)rolling plan
D)single-use plan

Question 39

A formal, written guide to action for employees in an organization is known as a

A)policy.
B)rule.
C)standard operating procedure.
D)rolling plan.

Question 40

The strategy that explains the methods that a division or an organization will use to compete against its rivals in the industry is a ________-level strategy.

A)functional
B)departmental
C)corporate
D)business

Question 41

An organization attempts to succeed by distinguishing its products from those of the competition; this is a(n)________ strategy.

A)differentiation
B)low-cost
C)related diversification
D)unrelated diversification

Question 42

Cheng-En has just completed a study for his company, NewElectronics, Inc., which produces wireless earbuds. This study focuses on the major threats to NewElectronics. Cheng-En has found that his company has one major rival, MagicSounds, Inc., which has developed impressive brand loyalty. Cheng-En's company uses a specific type of metal that only a few suppliers offer. However, NewElectronics's earbuds would still be affordable for many customers. Furthermore, Cheng-En does not see any products that can be used in place of New Electronics earbuds. Based on what you know about Michael Porter's five forces model, which of the following would Cheng-En claim is the greatest threat to NewElectronics?

A)the low prices of earbuds as a result of fierce competition
B)the high price of the metal used to make the earbuds
C)the ease with which his company could enter the earbud market
D)customers bargaining to drive down the prices of earbuds

Question 43

The planning and strategy making necessary to increase the efficiency and effectiveness of a particular function are the responsibility of a

A)divisional manager.
B)CEO.
C)corporate office.
D)functional manager.

Question 44

The decision of a company to invest in state-of-the-art European production facilities is an example of a ________-level strategy.

A)division
B)business
C)corporate
D)functional

Question 45

An advantage of the differentiation strategy is

A)less expensive new products.
B)a higher level of employee skills.
C)reduced turnover of employees.
D)greater barriers to entry.

Question 46

Concentration on a single industry, vertical integration, diversification, and international expansion are principal strategies of the ________ level of an organization.

A)functional
B)department
C)corporate
D)business

Question 47

The motorcycle company EasyRider, Inc., finds itself stuck in the middle. To make this situation profitable, EasyRider decides to

A)invest less in the production process, thereby lowering the quality of their motorcycles and lowering their price.
B)lower the prices for the motorcycles despite the high production costs associated with each model.
C)hone its production process to make it extremely efficient, thereby lowering production costs while maintaining high quality.
D)invest more in the production process, thereby improving the quality of the motorcycles and increasing their price.

Question 48

Coca-Cola spends an enormous amount of money on advertising to distinguish, and create a unique image for, their products. Coca-Cola is pursuing a ________ strategy.

A)diversification
B)focused low-cost
C)differentiation
D)low-cost

Question 49

Olav is the CEO for Blue Stone, Ltd., which makes costume jewelry designed by a Spanish artist named Valeria. As a result, this jewelry has strong appeal in areas of the United States with a large Latino population. However, the U.S. market already has two companies that make high-quality costume jewelry, which are popular with people who have a mid-to-high range income. Considering all of these elements, what should Olav do to ensure Blue Stone gains market share and is profitable?

A)He should make sure every department, including production and marketing, is focused on highlighting how Valeria's designs are different from those of the competition.
B)He should focus the efforts of all departments on showing U.S. customers why Blue Stone's costume jewelry is better quality than fine jewelry.
C)He should ensure that every department, from production to marketing to shipping, focuses on reducing their costs below those of their competitors.
D)He should narrow the company's target market to just the Latino market in a few areas of the United States and ensure that Blue Stone's prices are the lowest.

Question 50

Digicom Corp. attempts to gain a competitive advantage by driving down its production costs per unit below those of its competitors. Digicom is pursuing a(n)________ strategy.

A)focused differentiation
B)low-cost
C)related diversification
D)unrelated diversification

Question 51

The corporate-level strategy that involves a company reinvesting its profits to strengthen its competitive position in the industry in which it is currently operating is

A)vertical integration.
B)international expansion.
C)market development.
D)concentration on a single industry.

Question 52

What is the plan of action for a business-level strategy based on SWOT analysis?

A)to maximize an organization's ability to create value
B)to take advantage of favorable opportunities
C)to choose industries and countries to invest in
D)to improve task-specific activities within the organization

Question 53

Which of the following is most likely to require a short-term plan?

A)corporate mission
B)business strategies
C)functional goals
D)divisional structure

Question 54

What happens when there are only a few large customers in the market?

A)They keep changing their tastes, fads, and fashions.
B)They drive down the price of the output through bargaining.
C)They tend to be referred to as "stuck in the middle."
D)They start concentrating on a single industry.

Question 55

EnergyPlus, Ltd., produces nutritional fruit bars, but is having trouble staying in business. Considering Michael Porter's five force model, which of the following is most likely the greatest threat for this company?

A)many suppliers that provide its ingredients
B)the existence of one other major competitor
C)the introduction of a new granola bar to the market
D)an increase in the use of indoor exercise equipment

Question 56

Sterling, Inc., pursues a low-cost strategy by

A)concentrating on its advertising department to make its pens more desirable than its rivals.
B)focusing on its design department to make its pens more attractive than its rivals.
C)concentrating on R&D to make its pens more reliable than its rivals.
D)focusing on using cheaper resources to make its pens less expensive than its rivals.

Question 57

Best Grounds Coffee wants to pursue a vertical integration corporate level strategy. To accomplish this, it

A)develops new products, including an expresso machine.
B)purchases the supplier in Brazil that provides its coffee beans.
C)starts a cookie company to complement its production of coffee.
D)buys an electronics company that specializes in GPS devices.

Question 58

Clark is the new CEO of Stonehedge, Inc. He wants to pursue a focused low-cost strategy for his company, which sells weapons and gear to hunters. To accomplish this, he will

A)keep the prices of the company's hunting weapons and gear about the same as those of the competition.
B)make the prices of the company's hunting weapons less than those of the competition, but keep the gear's price about the same as that of the competition.
C)make the prices of the company's hunting weapons and gear less than those of the competition.
D)keep the prices of the company's hunting weapons about the same as those of the competition, but make the gear's price higher than that of the competition.

Question 59

A company that is serving only a few market segments has most likely adopted a ________ strategy.

A)focused differentiation
B)focused low cost
C)horizontal integration
D)vertical integration

Question 60

BMW produces cars exclusively for high-income customers. BMW is pursuing a ________ strategy.

A)focused differentiation
B)focused low-cost
C)diversification
D)low-cost

Question 61

When Procter & Gamble uses the same distribution system to deliver its oral care products and its hair care products to drugstore chains, this is an example of

A)synergy.
B)differentiation.
C)diversification.
D)merger.

Question 62

When PepsiCo purchased Frito-Lay and expanded its operations into the snack-food business, it was pursuing a ________ strategy.

A)vertical integration
B)market penetration
C)diversification
D)market development

Question 63

The reason managers pursue vertical integration is that it

A)provides stable environmental conditions.
B)improves flexibility in operations.
C)increases sales overall.
D)strengthens competitive advantage.

Question 64

Firestone Tire and Rubber Company set up a chain of Firestone retail stores to sell its tires to American consumers. This is an example of

A)forward vertical integration.
B)global strategy.
C)focused differentiation strategy.
D)multidomestic strategy.

Question 65

When General Electric Company expanded its operations by acquiring NBC television, this was an illustration of

A)vertical integration.
B)diversification.
C)market penetration.
D)a low-cost strategy.

Question 66

Procter & Gamble uses a joint sales force to sell both its laundry detergent products and its bath soap products to the same supermarket chains. This is an example of

A)a focused differentiation strategy.
B)a low-cost strategy.
C)a differentiation strategy.
D)synergy.

Question 67

Madison Hotels sold a foreign organization the right to use its brand name and operating know-how in return for a lump-sum payment and a share of the profits. This is an example of

A)franchising.
B)licensing.
C)a strategic alliance.
D)a joint venture.

Question 68

PepsiCo purchased KFC so that it could replace Coke products with Pepsi products in KFC restaurants. This is an example of a ________ strategy.

A)horizontal integration
B)vertical integration
C)low-cost
D)global

Question 69

When managers pool or share their organization's resources and know-how with those of a foreign company, and the two organizations share the rewards or risks of starting a new venture in a foreign country, the two organizations are involved in

A)a joint venture.
B)a strategic alliance.
C)differentiation.
D)licensing.

Question 70

Two divisions of a company decide to use the same manufacturing facilities to capitalize on the organization's excess capacity and to reduce the fixed costs assigned by corporate headquarters. This is an example of

A)diversification.
B)merger.
C)consolidation.
D)synergy.

Question 71

Manuela is one of the top managers at Electrix, Ltd. She wants her company to use a global strategy by

A)buying the company in Mexico that sells its TVs and DVD players.
B)buying the company in Mexico that supplies the metal for its TVs and DVD players.
C)selling its TVs and DVD players in France using the marketing approach that is used in the United States.
D)selling its TVs and DVD players in France using a marketing approach that tailored toward French culture.

Question 72

When Gallo purchased a company that makes wine bottles, it was involved in ________ integration.

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

Question 73

The least complex global operation is

A)a joint venture.
B)exporting.
C)licensing.
D)franchising.

Question 74

The form of international expansion that gives an organization high potential return because the organization does not have to share its profits with a foreign organization and reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations, is a

A)joint venture.
B)partial venture.
C)partially owned foreign subsidiary.
D)wholly owned foreign subsidiary.

Question 75

When an organization enters a new type of industry, which is not similar in any way to the current businesses of the organization, it is engaged in

A)concentration on a single business.
B)unrelated diversification.
C)international expansion.
D)related diversification.

Question 76

Hemisphere Corporation decides to enter a new type of business in order to create a competitive advantage in one of its existing businesses. Hemisphere is engaging in

A)concentration on a single business.
B)related diversification.
C)vertical integration.
D)international expansion.

Question 77

Firestone Tire and Rubber Company purchases rubber plantations in Africa so that it will have a source of supply for its tire manufacturing plants in Akron, Ohio. This is an example of a ________ strategy.

A)forward vertical integration
B)global
C)diversification
D)backward vertical integration

Question 78

FarHorizons, Inc., allows Banerjee, a foreign organization, to take charge of both manufacturing and distributing one or more of its products in India in return for a negotiated fee. This is an example of

A)exporting.
B)licensing.
C)a strategic alliance.
D)a joint venture.

Question 79

Carry On, Inc., sells different products using a different marketing approach in England than it uses when marketing these products in the United States. This is an example of a ________ strategy.

A)vertical integration
B)focused low-cost
C)global
D)multidomestic

Question 80

TechnoSol Ltd. produces solar heating devices, including solar panels. The company decides to pursue an unrelated diversification corporate-level strategy when it buys

A)the retail stores that sell its solar panels.
B)the metal supplier for its solar panels.
C)a company that produces athletic gear, including basketball shoes.
D)a company that produces heating equipment, including furnaces.