Deck 4: Strategy Fundamentals and Corporate Strategy

Question 1

A vital capability such as marketing ability is called a firm's core competence.

Answer 1

False

Question 2

The principal means by which a firm changes its portfolio of businesses is through alliances.

Answer 2

False

Question 3

Support activities are the major categories of activities that must take place in a firm to actually produce its products and services.

Answer 3

False

Question 4

The total package of products that complement each other is typically referred to as a product class.

Question 5

Business-level strategies are the strategies of the different departments, such as accounting, engineering, and marketing, that act in support of the given functional strategy.

Question 6

The three components of the strategy process include planning, implementation, and evaluation and control.

Question 7

If a firm with market power lowers prices, other smaller firms are forced to do the same.

Question 8

Information-gathering in the planning process should begin with the external environment in which the firm competes.

Question 9

Mission statement is a simple statement of the basic purpose or reason for the business to
exist and its activities.

Question 10

On the whole, mergers and acquisitions have a poor record of performance.

Question 11

Corporate strategy establishes how diversified the firm is to become and in what domains that diversification will occur.

Question 12

The most valuable asset of a firm is values.

Question 13

For an international firm, changes in the environment are more active than for a firm that only competes in a single market.

Question 14

If the firms in a merger or acquisition rely on similar skills to conduct the critical activities of the firms, then it is conglomerate diversification.

Question 15

Strategy is a coordinated set of actions that fulfills the firm's objectives, purposes, and goals.

Question 16

Strategic planning is an effort by which an organization defines the nature of the products and/or services it provides.

Question 17

A comparative advantage results from something that the firm does better than any of its competitors.

Question 18

Core competencies are present in high technology and manufacturing firms, but not in service firms.

Question 19

A value-chain analysis breaks the firm's activities into primary activities and support activities.

Question 20

Capabilities are the foundation on which a firm builds its strategy.

Question 21

Strategic planning:

A) is a coordinated set of actions that fulfills the firm's objectives, purposes, and goals.
B) helps define the type of organization the firm intends to be, and the nature of the contribution it makes to its constituents.
C) is an effort by which an organization defines the nature of the products and/or services it provides.
D) is the process by which a firm decides its direction over the next several years.

Question 22

Which of the following statements about a firm's mission statement is false?

A) Typically, mission statements are short, with approximately 5 to 10 words.
B) It is a simple statement of the basic purpose for the firm's existence.
C) The firm will include its ''reason for existence'' in its mission statement.
D) It identifies what is unique about the firm.

Question 23

All of the following are reasons for a firm's competitive advantage EXCEPT:

A) the activity is something that customers value.
B) it is something that affects the supplier's purchasing decisions.
C) it is something that other firms cannot easily duplicate.
D) the firm is able to build value for the shareholders of the firm.

Question 24

Which of the following is a useful tool that conceptualizes how all the aspects of a firm's implementation of its strategy fit together, and that breaks the firm's activities into primary activities and support activities?

A) Resource analysis
B) Core competency analysis
C) Strategic group analysis
D) Value-chain analysis

Question 25

The greatest implementation barrier to international firms working together in an M&A is the cultural differences of the firms involved.

Question 26

The steps in the planning process include all of the following EXCEPT:

A) data gathering.
B) mission generation.
C) objective setting.
D) evaluation and control.

Question 27

One of the major challenges facing a strategic alliance is measuring real costs and profits from the alliance.

Question 28

Functional skills that a firm develops and which are the foundation on which a firm builds its strategy are:

A) capabilities.
B) resources.
C) key success factors.
D) comparative advantages.

Question 29

According to the text, Sony is said to have a core competency in:

A) micromotors.
B) engines.
C) imaging technologies.
D) miniaturization.

Question 30

The principal means by which a firm changes its portfolio of businesses is through:

A) internal diversification.
B) mergers and acquisitions.
C) joint ventures.
D) alliances.

Question 31

Which of the following should be inventoried in the evaluation of a firm's internal capabilities?

A) Industry status
B) An analysis of economic trends
C) The physical assets of the firm
D) Resources available in the industry

Question 32

A firm's resources and capabilities are used to build the firm's core competencies which, in turn, are the building blocks for the firm's strategy and its:

A) core advantage.
B) absolute advantage.
C) competitive advantage.
D) comparative advantage.

Question 33

Which level of a firm's strategy establishes how diversified the firm is to become and in what domains that diversification will occur?

A) Business-level strategy
B) Corporate-level strategy
C) Functional-level strategy
D) Transitional-level strategy

Question 34

The _____ strategy of the firm is concerned with how the firm will compete in each product-market or industry once they have been chosen.

A) business-level
B) functional-level
C) corporate-level
D) transitional-level

Question 35

Alliances that are intermediate in their formality are agreements that have more interaction between the parties, and less agreement between each party in the alliance is required.

Question 36

Core competencies:

A) are rare and typically cut across functional boundaries.
B) are tangible and intangible assets that firms possess.
C) are things that are important only to customers.
D) are basic functional capabilities.

Question 37

The special capabilities that are the most critical to a firm's success are called:

A) key success factors.
B) core competencies.
C) missions and visions.
D) hidden assets.

Question 38

Which of the following is NOT an example of a key success factor in an airline firm?

A) An information system that allows the airline to better match demand and flight frequency.
B) The ability to work well with their employees and unions to generate maximum efficiency.
C) The capability of designing the best uniform for its employees.
D) The organizational routines to turn planes around faster.

Question 39

Horizontal M&As involve acquired and acquiring firms that are at the same stage of the production process in the same industry.

Question 40

It is more common for firms to forward integrate in turbulent product markets than in mature ones.

Question 41

The total package of products that complement each other is typically referred to as a:

A) product mix.
B) product class.
C) product placement.
D) product platform.

Question 42

Compare and contrast the three different levels of strategy.

Question 43

List the strategic goals that a firm can accomplish through M&As. Explain at least one of them.

Question 44

In which type an alliance do two firms agree to support each other's activities in some manner, where the agreements are strictly informal with few, if any, legal protections to enforce the agreements?

A) Subcontracting alliances
B) Joint ventures
C) Licensing arrangements
D) Informal alliances

Question 45

Which of the following usually means that the firms will partner to produce and sell a given product or service?

A) Turnkey project
B) Exporting
C) Merger
D) Strategic alliance

Question 46

Typical barriers to entry in the acquisition of a new business include all of the following EXCEPT:

A) government hostility toward outside firms that market their product in a country but do not produce it there.
B) distribution channels where wholesalers are unwilling to take on new firms.
C) low levels of customer loyalty in the area.
D) a geographic area where the best retail locations are already taken.

Question 47

In terms of the factors motivating a firm entering into an M&A, which of the following is true?

A) Smaller firms are more willing to pursue an M&A because it limits their financial exposure.
B) In high-risk environments, firms are less likely to want to commit resources necessary for an M&A.
C) Managers like M&As in entering developing countries if the systematic country risk is high.
D) M&As are a good way to test a new market and to see if two firms can share technology effectively.

Question 48

U.S.-based Unigen Pharmaceuticals has aggressively taken over worldwide suppliers of the delicate plants needed for their pharmaceutical and nutritional products. This is an example of:

A) horizontal merger and acquisition.
B) conglomerate diversification.
C) vertical integration.
D) horizontal monopoly.

Question 49

In a(n) _____, two or more firms both put some resources into a new, separate entity.

A) equity joint venture
B) subcontract
C) licensing arrangement
D) consortia

Question 50

The most important dimension along which alliances can be differentiated is the _____ of the alliance.

A) mutuality
B) formality
C) professionality
D) emotionality

Question 51

Which theory states that the recognition that those who own firms and manage them are now separated, and thus the agents may act in their own best interest rather than that of the firm?

A) Agency theory
B) Contract theory
C) M&A theory
D) Attribution theory

Question 52

Which of the following is characterized by several organizations joining together to share expertise and funding for developing, gathering, and distributing new knowledge?

A) Subcontracts
B) Joint ventures
C) Consortia
D) Licensing arrangements

Question 53

Write a short note on the data-gathering step of planning.

Question 54

Briefly describe strategy. How does it differ from strategic planning?

Question 55

What are the major challenges facing strategic alliances? Explain.

Question 56

Define mergers and acquisitions. How do they differ?

Question 57

What are the advantages of vertical integration?