Question 1

What is a greenfield entry? When should a company use it?

Accepted Answer

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Question 2

Which of the following is an ancient Greek word for excessive pride, arrogance, or overconfidence that is used to refer to the actions of managers when they diversify or make acquisitions based on their own experience or gut feelings rather than on solid data and research?

Accepted Answer

A) Kanban 
B) Hubris 
C) Agora 
D) Kaizen

Question 3

Lee, the CEO of Libra Inc., decided that the best way to diversify this food processing company would be to set up its own small-scale beverage producing unit in a new area where its new products would have high demands. This decision by Lee best reflects a(n)_________.

Accepted Answer

A) acquisition 
B) greenfield entry 
C) brownfield entry 
D) merger

Question 4

Pisces Corp. is an apparel manufacturing company. It purchased a few of its raw material suppliers and set up their factories close to the clothing stores so that the company does not have to invest on transportation charges. This is an example of _________.

Accepted Answer

A) downward diversification 
B) forward integration 
C) backward integration 
D) horizontal diversification

Question 5

Pluto Corp. has been manufacturing hardware materials for its existing customer base for several years. Recently, the company introduced a new line of electronic products to its customers. Pluto Corp. is engaging in _________.

Accepted Answer

A) vertical integration 
B) market penetration 
C) value based initiative 
D) horizontal diversification

Question 6

Identify a limitation of the Boston Consulting group's growth share matrix.

Accepted Answer

A) It is complex and difficult to understand. 
B) It does not help in evaluating a firm's current portfolio. 
C) It does not provide any guidance to the managers of firms about which business units to invest in and which business units to divest. 
D) It says almost nothing about whether a business unit will help the corporation exploit or expand a company's resources and capabilities.

Question 7

Explain the ways in which diversification adds value.

Accepted Answer

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Question 8

The movement into an adjacent, or unrelated, market that is not along a firm's own value chain defines the term _________.

Accepted Answer

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

Question 9

In order to successfully carry out an acquisition, the managers at Pink Inc. prepared a list of potential target companies that it could purchase. In the next step, the managers evaluated each prospective company in depth to understand their methods of operations, processes, procedures, strengths, and limitations in order to choose the best target company. This process of evaluating the companies is best known as _________.

Accepted Answer

A) due diligence 
B) market intelligence 
C) consultation 
D) market evaluation

Question 10

Spring Resources LLC creates unique value by establishing a learning organization that coordinates various production tactics and assimilates different types of technologies. This knowledge is distributed to the entire organization so that its branches can adapt and perform according to their own markets. These tactics and technologies distributed throughout the organization that create value for Spring Resources LLC are termed _________.

Accepted Answer

A) inimitability practices 
B) prestige development 
C) core competencies 
D) dominant logic

Question 11

Which of the following statements represents related-constrained diversification?

Accepted Answer

A) A firm earning more than 95 percent of the revenues from a single line of business 
B) A firm that earns more than 70 percent of its revenue from its main line of business and the rest from businesses located along the value chain 
C) A firm that earns less than 70 percent of its revenue from its main line of business and whose other lines of business share product, technological, and distribution linkages with the main business 
D) A firm that earns more than 70 percent of its revenue from its main line of business and the remainder from other lines across different value chains

Question 12

Slack refers to _________.

Accepted Answer

A) a lag in the production 
B) unused resource capacity 
C) reduced production capacity 
D) a lack of adequate resources

Question 13

What are the mechanisms that help companies in exploiting and/or expanding their resources and capabilities?

Accepted Answer

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Question 14

How does diversification help exploit existing customer-facing resources?

Accepted Answer

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Question 15

Even though companies offer varied products and provide unique value to their customers, they have similar barriers to face when entering into a host country due to policies set up by the country's government. The similarities shared by the companies in the way they set up business in the country are an example of a(n)_________.

Accepted Answer

A) plan of action 
B) passive judgment 
C) dominant logic 
D) imitation

Question 16

Sparkle LLC, a beverage industry, earns almost all of its profits only by selling beverages. Sparkle LLC can be best categorized as a _________.

Accepted Answer

A) single business 
B) diversified business 
C) dominant vertical business 
D) dominant business

Question 17

Which of the following statements best describes corporate strategy?

Accepted Answer

A) It is an approach for creating competitive advantage within a single industry, market, or line of business. 
B) It refers to a firm's strategy of selling existing products to new customers. 
C) It refers to a firm's strategy of selling new services to new customers. 
D) It is an approach for creating value and competitive advantages through participation in several different industries and markets.

Question 18

Winter Sources Inc., an apparel manufacturer, recently opened a retail store in its unused office space to sell the excess material produced. In this way, the company generated extra profits. The unused space that was available to Winter Sources Inc. is an example of _________.

Accepted Answer

A) kanban 
B) kaizen 
C) hubris 
D) slack

Question 19

The main focus of Neptune Corp. is to sell apparel, which amounts to 70 percent of its revenue. It also runs warehouses, distribution centers, and logistics as additional businesses that generate the rest of the 30 percent of the earnings. Which level of diversification is followed by Neptune Corp.?

Accepted Answer

A) Single business 
B) Dominant business 
C) Related-linked business 
D) Dominant vertical business

Question 20

Under which of the following conditions should a firm ideally choose the acquisition mode of entry?

Accepted Answer

A) When it can afford to enter new arenas slowly 
B) When its industry favors competitors with small scale 
C) When its industry is characterized by a steep learning or experience curve 
D) When its industry demands standardized knowledge and skills that can be easily gained

Exam 6: Corporate Strategy