Question 1

Which of the following activities should not be outsourced by a virtual corporation?

Accepted Answer

A) Manufacturing 
B) Research and development (R&
D)  
C) Materials management 
D) Contract management 
E) Marketing

Question 2

How can strategic outsourcing strengthen a company's business model and increase its profitability?

Accepted Answer

The answer of How can strategic outsourcing strengthen a company's...

Question 3

Compare the benefits and risks associated with horizontal and vertical integration.Under what circumstances would a firm prefer one over the other?

Accepted Answer

The answer of Compare the benefits and risks associated with...

Question 4

Strategic outsourcing is best described as a

Accepted Answer

A) means of getting rid of excess activities. 
B) way of getting other companies to do what the outsourcing company no longer wants to do. 
C) method of streamlining the marketing activities of a company. 
D) decision to allow one or more of a company's value chain activities to be performed by other companies. 
E) none of these choices.

Question 5

Which of the following is not a characteristic of strategic alliances entered into to support related diversification?

Accepted Answer

A) It is a way for companies to realize some of the benefits of diversification at a lower level of bureaucratic costs. 
B) It requires each company to take an equity stake in the new venture. 
C) A disadvantage is the risk of losing proprietary know-how to a competitor. 
D) It entails investing in a new business or product (including upgrades)instead of an existing one. 
E) It allows a company to swap complementary skills.

Question 6

One outcome of horizontal integration is industry consolidation,leading to more bargaining power over buyers and suppliers.

Accepted Answer

A) True 
 B)False

Question 7

When there is a minimal need for close long-term cooperation between a company and its suppliers,which of the following strategies is the most appropriate?

Accepted Answer

A) Full integration 
B) Taper integration 
C) Competitive bidding 
D) Long-term contracting 
E) Diversification based on economies of scope

Question 8

Under which of the following circumstances is vertical integration most likely to help a company establish itself as a differentiated player in its core business?

Accepted Answer

A) When backward vertical integration involves circumventing suppliers with the power to charge high prices 
B) When vertical integration is based on a desire to avoid paying market middlemen 
C) When vertical integration allows the company to establish for itself a stable supply of high-quality inputs 
D) When vertical integration facilitates close coordination among adjacent stages of production,eliminating the need to hold excessive inventories 
E) When vertical integration prohibits technologically complementary processes being carried out in quick succession

Question 9

Product bundling occurs when a firm offers a range of products that are sold together at a single price.

Accepted Answer

A) True 
 B)False

Question 10

Strategic alliances and outsourcing are two alternatives to vertical integration.What are the advantages and disadvantages of each compared to vertical integration? What can managers do to eliminate or reduce the risks?

Accepted Answer

The answer of Strategic alliances and outsourcing are two alternatives...

Question 11

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Accepted Answer

A) True 
 B)False

Question 12

When technology in an industry is changing rapidly,a company pursuing a strategy of vertical integration may find itself

Accepted Answer

A) locked into an old,inefficient technology. 
B) able to sell its products at continually lower prices. 
C) increasing returns on its assets. 
D) all of these choices. 
E) none of these choices.

Question 13

Bauxite ore,the raw material used to produce aluminum,varies considerably in content; thus,a refinery must be designed for the particular type of ore that it refines.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a benefit of vertical integration?

Accepted Answer

A) Facilitating investments in specialized assets 
B) Enhancing product quality 
C) Improved scheduling 
D) Increasing cost structure 
E) None of these choices

Question 15

A hospital supply company invests in training for a team of sales associates to learn the details of each hospital chain's operations.In return,the hospital chain invests in a computer system that supports supply ordering.The supply company and the hospital chain are working to ensure the success of their long-term relationship by

Accepted Answer

A) reducing the risk of losing proprietary technology. 
B) making a credible commitment. 
C) encouraging competitive bidding. 
D) facilitating vertical integration. 
E) using parallel sourcing.

Question 16

Horizontal integration almost always increases rivalry in an industry.

Accepted Answer

A) True 
 B)False

Question 17

A credible commitment on the part of two companies is an example of a

Accepted Answer

A) short-term agreement. 
B) commitment that may be terminated by either company at any time. 
C) believable promise or pledge to support the development of a long-term relationship between companies. 
D) public relations gesture undertaken to stimulate sales. 
E) marketing strategy.

Question 18

Companies can maintain market discipline over suppliers by

Accepted Answer

A) outsourcing. 
B) demanding hostages. 
C) attaining a credible commitment. 
D) parallel sourcing. 
E) full integration.

Question 19

At the time of the merger of Hewlett Packard and Compaq,Dell Computer's competitive advantage over Hewlett Packard was based on Dell's cost-leadership business model.

Accepted Answer

A) True 
 B)False

Question 20

John's surfboard shop has a long-term relationship with two surfboard makers.John is using

Accepted Answer

A) parallel sourcing. 
B) cross-selling. 
C) product bundling. 
D) vertical integration. 
E) horizontal integration.

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

Which of the following activities should not be outsourced by a virtual corporation?

How can strategic outsourcing strengthen a company's business model and increase its profitability?

Compare the benefits and risks associated with horizontal and vertical integration.Under what circumstances would a firm prefer one over the other?

Strategic outsourcing is best described as a

Which of the following is not a characteristic of strategic alliances entered into to support related diversification?

One outcome of horizontal integration is industry consolidation,leading to more bargaining power over buyers and suppliers.

When there is a minimal need for close long-term cooperation between a company and its suppliers,which of the following strategies is the most appropriate?

Under which of the following circumstances is vertical integration most likely to help a company establish itself as a differentiated player in its core business?

Product bundling occurs when a firm offers a range of products that are sold together at a single price.

Strategic alliances and outsourcing are two alternatives to vertical integration.What are the advantages and disadvantages of each compared to vertical integration? What can managers do to eliminate or reduce the risks?

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

When technology in an industry is changing rapidly,a company pursuing a strategy of vertical integration may find itself

Bauxite ore,the raw material used to produce aluminum,varies considerably in content; thus,a refinery must be designed for the particular type of ore that it refines.

Which of the following is not a benefit of vertical integration?

Horizontal integration almost always increases rivalry in an industry.

A credible commitment on the part of two companies is an example of a

Companies can maintain market discipline over suppliers by

At the time of the merger of Hewlett Packard and Compaq,Dell Computer's competitive advantage over Hewlett Packard was based on Dell's cost-leadership business model.

John's surfboard shop has a long-term relationship with two surfboard makers.John is using