Deck 5: Strategies in Action

Question 1

Since a combination strategy is not risky, many organizations pursue a combination of two or more strategies simultaneously.

Answer 1

False

Question 2

Market penetration, market development, product development and joint venture are intensive strategies.

Answer 2

False

Question 3

Franchising is an effective means of implementing forward integration.

Answer 3

True

Question 4

When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.

Question 5

A strategy of seeking ownership or increased control of a firm's supplier is backward integration.

Question 6

Strategic objectives include larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.

Question 7

Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.

Question 8

Divestiture is selling all of a company's assets, in parts, for their tangible worth.

Question 9

"If it ain't broke, don't fix it" refers to managing by crisis.

Question 10

Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins and improved cash flow.

Question 11

Long-term objectives represent the results expected from pursuing certain strategies.

Question 12

Objectives provide direction and allow for organizational synergy.

Question 13

A growing trend is for franchisers to buy out their part of the business from their franchisees.

Question 14

McDonalds currently owns more than 50 percent of its restaurants.

Question 15

A chief executive officer is located in the divisional level of a large firm.

Question 16

If a firm's present suppliers are expensive and unreliable in meeting the firm's needs for parts, components and/or raw materials, the firm should pursue a horizontal integration strategy.

Question 17

The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.

Question 18

Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.

Question 19

Horizontal integration is seeking ownership or increased control over competitors.

Question 20

Gaining ownership or increased control over distributors or retailers is called forward integration strategy.

Question 21

Retrenchment and turnaround are the same strategy.

Question 22

Chapter 9 bankruptcy applies to municipalities.

Question 23

Unrelated diversification may be an especially effective strategy when an organization's basic industry is experiencing increasing annual sales and profits.

Question 24

Market development includes introducing present products into new geographic areas.

Question 25

Morgan Stanley's building of a casino in Atlantic City is a good example of related diversification.

Question 26

Although expanding, Ford has greater sales inside the U.S. than abroad.

Question 27

Product development is a strategy that seeks increased sales by improving or modifying present products or services.

Question 28

Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.

Question 29

Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.

Question 30

Chapter 11 bankruptcy filings fell to a 10-year low in 2006.

Question 31

AT&T's acquisition of BellSouth in 2007 was the largest telecommunications acquisition ever approved in the U.S.

Question 32

Chapter 7 bankruptcy is a liquidation procedure used only when a firm sees no hope of being able to operate successfully or to obtain necessary creditor agreement.

Question 33

Divestiture has become a popular strategy for firms to focus on their core business and become more diversified.

Question 34

Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.

Question 35

Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.

Question 36

An appropriate strategy when an organization has excess production capacity is market development.

Question 37

Unrelated diversification is an appropriate strategy when an organization's present channels of distribution can be used to market the new products to current customers.

Question 38

Divestiture is the selling of land a firm owns.

Question 39

The related diversification strategy is effective when an organization has a weak management team.

Question 40

There are four basic types of diversification: concentric, conglomerate, forward and backward.

Question 41

An acquisition occurs when a large organization purchases a smaller one or vice versa.

Question 42

A best-value strategy offers products or services to a wide range of customers at the lowest price on the market.
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Question 43

Jiffy Lube International would be a good example of a firm seeking the best-value focus strategy.

Question 44

In a turbulent, high-velocity market, a lead-change strategy is best whenever the firm has the resources to pursue this approach.

Question 45

A differentiation strategy can be especially attractive when the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.

Question 46

A cost leadership strategy can be especially effective when most buyers use the product in the same way.

Question 47

Liquidation is often appropriate when retrenchment and divestiture have failed.

Question 48

When an acquisition or merger is not desired by both parties, it is called a takeover or hostile takeover.

Question 49

Union leaders are generally in favor of mergers because mergers generally reduce the income disparity between corporate executives and workers.

Question 50

Cooperative arrangements and joint ventures between competitors are becoming increasingly popular.

Question 51

The number of mergers in 2006 decreased to a 10-year low in the U.S.

Question 52

Divestiture would be an appropriate strategy when a need exists to introduce a new technology quickly.

Question 53

A low-cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.

Question 54

The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.

Question 55

A differentiation strategy can only be achieved with a large target market.

Question 56

Gaining a differentiation advantage is a primary reason for pursuing forward, backward, and horizontal integration strategies.

Question 57

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation and integration.

Question 58

A low cost focus strategy can be especially attractive when the target market niche is small.

Question 59

Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.

Question 60

For consumers who are price sensitive, cost leadership emphasizes producing standardized products at very low per-unit cost.

Question 61

All of the following are important factors in the Balanced Scorecard except:

A) customer service.
B) employee morale.
C) product quality.
D) business ethics.
E) stockholder equity

Question 62

In 2005, immigrants started 25 percent more companies per capita than native born citizens did.

Question 63

Which level of strategy is most likely not present in small firms?

A) Corporate/company
B) Functional
C) Divisional
D) Operational
E) All of these are present in small firms

Question 64

Southwest Airlines selling tickets through Galileo is an example of which type of strategy?

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

Question 65

First mover advantage refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

Question 66

What principle is built on the idea that there is no general plan for which way to go and what to do?

A) Managing by crisis
B) Managing by extrapolation
C) Managing by objectives
D) Managing by hope
E) Managing by exception

Question 67

Whirlpool selling its struggling Hover floor-care business to Techtronic Industries is an example of which type of strategy?

A) related diversification
B) unrelated diversification
C) retrenchment
D) divestiture
E) liquidation

Question 68

Research shows strategic management in small firms is more formal than in large firms, but large firms that engage in strategic management outperform those that do not.

Question 69

Burger King opening its first restaurant in Japan is an example of which type of strategy?

A) forward integration
B) backward integration
C) horizontal integration
D) market development
E) product development

Question 70

The nonprofit sector is America's largest employer.

Question 71

Financial objectives involve all of the following except:

A) growth in revenues.
B) larger market share.
C) higher dividends.
D) greater return on investment.
E) a rising stock price

Question 72

Which of the following is most likely not included in the functional level of a small company?

A) Finance
B) Marketing
C) R & D
D) Department managers
E) Human resource managers

Question 73

Long-term objectives are needed at which levels) in an organization?

A) Corporate
B) Divisional
C) Functional
D) all of these
E) none of these

Question 74

What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems?

A) Managing by crisis
B) Managing by objectives
C) Managing by extrapolation
D) Managing by exception
E) Managing by hope

Question 75

Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.

Question 76

A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.

Question 77

Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does not allow a firm to concentrate on core competencies.

Question 78

All sizes and types of organizations can utilize and benefit from strategic-management concepts and techniques.

Question 79

All of the following are important factors in the Balanced Scorecard except:

A) customer service.
B) employee morale.
C) product quality.
D) business ethics.
E) stockholder equity

Question 80

India commands over 60 percent of all backoffice outsourcing.