Deck 5: Strategies in Action

Question 1

Long-term objectives are needed at the corporate, divisional, functional, and operational levels of an organization.

Answer 1

True

Question 2

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

Answer 2

True

Question 3

Because a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.

Answer 3

False

Question 4

Which strategy is effective when new, but related, products could be offered at highly competitive prices?

A) Forward integration
B) Related diversification
C) Related integration
D) Conglomerate diversification
E) Unrelated diversification

Question 5

Forward integration and backward integration are sometimes collectively referred to as

A) horizontal integration.
B) diversification.
C) vertical integration.
D) stuck-in-the-middle.
E) hierarchical integration.

Question 6

Long-term objectives are needed at which level(s) in an organization?

A) Corporate
B) Divisional
C) Functional
D) Functional, divisional, and corporate
E) Corporate and divisional levels, but not functional level

Question 7

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

A) Company
B) Functional
C) Divisional
D) Operational
E) Global

Question 8

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

Question 9

Which strategy should an organization use when its products are currently in the declining stage of the product's life cycle?

A) Divestiture
B) Related diversification
C) Backward integration
D) Unrelated diversification
E) Retrenchment

Question 10

Objectives provide direction and allow for organizational synergy.

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

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 mystery

Question 16

Horizontal integration is seeking ownership or increased control over competitors.

Question 17

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

Question 18

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 19

Panera installing online ordering and delivery from their restaurants is an example of which type of strategy?

A) Forward integration
B) Backward integration
C) Horizontal integration
D) Related diversification
E) Unrelated diversification

Question 20

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

Question 21

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

Question 22

Which strategy generally entails large research and development expenditures?

A) Market penetration
B) Retrenchment
C) Forward integration
D) Product development
E) Divestiture

Question 23

Which of these strategies is effective when the number of suppliers is small and the number of competitors is large?

A) Conglomerate diversification
B) Forward integration
C) Concentric diversification
D) Backward integration
E) Horizontal diversification

Question 24

An effective means of implementing forward integration is through

A) product development.
B) market development.
C) innovation.
D) cost leadership.
E) franchising.

Question 25

When a domestic company first begins to export to India, it is an example of

A) horizontal integration.
B) backward integration.
C) forward integration.
D) concentric diversification.
E) market development.

Question 26

List and define the three types of integration strategies.

Question 27

List three guidelines for when horizontal integration would be a particularly good strategy to pursue.

Question 28

Which strategy seeks to increase market share for present products or services in present markets through greater marketing efforts?

A) Market penetration
B) Forward integration
C) Market development
D) Backward integration
E) Product development

Question 29

Limited availability of quality distributors is a reason why competitive advantage could result from forward integration.

Question 30

Which strategy is appropriate when an organization competes in an industry characterized by rapid technological developments?

A) Retrenchment
B) Product development
C) Backward integration
D) Liquidation
E) Market penetration

Question 31

In which situation would horizontal integration be an especially effective strategy?

A) When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for "tending substantially" to reduce competition
B) When an organization competes in a slowing industry
C) When decreased economies of scale provide major competitive advantages
D) When an organization has neither the capital nor human talent needed to successfully manage an expanded organization
E) When competitors are succeeding due to managerial expertise or having particular resources an organization possesses

Question 32

List three guidelines for when forward integration would be a particularly good strategy to pursue.

Question 33

Franchising is an effective means of implementing forward integration.

Question 34

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 35

All of the following situations are conducive to market development EXCEPT

A) when new channels of distribution are expensive and unreliable.
B) when an organization is successful at what it does.
C) when new untapped or unsaturated markets exist.
D) when an organization has excess production capacity.
E) when an organization's basic industry is rapidly becoming global in scope.

Question 36

Backward integration is effective in all of these cases EXCEPT

A) when an organization competes in an industry that is growing rapidly.
B) when an organization has both capital and human resources to manage the new business of supplying its own raw materials.
C) when an organization needs to acquire a needed resource quickly.
D) when the advantages of stable prices are not particularly important.
E) when present suppliers have high profit margins.

Question 37

What refers to a strategy of seeking ownership of, or increased control over a firm's competitors?

A) Forward integration
B) Conglomerate diversification
C) Backward integration
D) Horizontal integration
E) Concentric diversification

Question 38

Company websites that sell products they produce directly to consumers are examples of which type of strategy?

A) Backward integration
B) Product development
C) Forward integration
D) Horizontal integration
E) Conglomerate diversification

Question 39

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

Question 40

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

Question 41

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

Question 42

Diversification strategies are becoming more popular as organizations are finding it easier to manage diverse business activities.

Question 43

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

Question 44

The purchase of 80 percent of Procter & Gamble's pet-food brands by Mars Inc., best known for its M&M chocolates and its Mars and Snickers candy bars, is an example of related diversification.

Question 45

Market development includes introducing present products into new geographic areas.

Question 46

In order to exploit common use of a well-known brand name, most companies favor related diversification strategies.

Question 47

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

Question 48

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

Question 49

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

Question 50

Procter & Gamble's (P&G) sale of many of its brands in order to focus on its core brands is an example of which type of strategy?

A) Related diversification
B) Unrelated diversification
C) Retrenchment
D) Divestiture
E) Liquidation

Question 51

List three guidelines for when market development would be a particularly good strategy to pursue.

Question 52

If Gap opens five stores for the first time in China, this is an example of which type of strategy?

A) Forward integration
B) Backward integration
C) Horizontal integration
D) Market development
E) Product development

Question 53

Define and give examples of three intensive strategies.

Question 54

A pasta manufacturer's purchase of some pet food brands is an example of

A) backward integration.
B) divestiture.
C) retrenchment.
D) unrelated diversification.
E) forward integration.

Question 55

List the two types of diversification strategies and state the clear distinction between them.

Question 56

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

Question 57

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

Question 58

List three guidelines for when related diversification would be a particularly good strategy to pursue.

Question 59

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 60

Which of the following is NOT a guideline for when an organization should use an unrelated diversification strategy?

A) When revenues derived from an organization's current products or services would increase significantly by adding the new unrelated, products
B) When an organization's present channels of distribution can be used to market the new products to current customers
C) When the new products have countercyclical sales patterns compared to an organization's present products
D) When an organization competes in a highly competitive and/or a no-growth industry
E) When existing markets for an organization's present products are not yet saturated

Question 61

Retrenchment is a turnaround strategy.

Question 62

Which strategy should be implemented when a division is responsible for an organization's overall poor performance?

A) Backward integration
B) Divestiture
C) Forward integration
D) Cost leadership
E) Related diversification

Question 63

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 64

Which term refers to selling a division or part of an organization?

A) Joint venture
B) Divestiture
C) Concentric diversification
D) Liquidation
E) Horizontal integration

Question 65

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

Question 66

Selling a division or part of an organization is called divestiture.

Question 67

Chapter 9 bankruptcy applies to municipalities.

Question 68

Which chapter of the bankruptcy code applies to municipalities?

A) Chapter 7
B) Chapter 8
C) Chapter 9
D) Chapter 12
E) Chapter 13

Question 69

What kind of strategy is retrenchment?

A) A turnaround strategy
B) An expansion strategy
C) A diagonal strategy
D) An intensive strategy
E) An offensive strategy

Question 70

Value chain analysis can enable a firm to better identify its own strengths and weaknesses especially as compared to competitors' value chain analyses and their own data over time.

Question 71

GoPro laid off one-fifth of its workforce and exited the drone market. This is an example of

A) divestiture.
B) backward integration.
C) liquidation.
D) retrenchment.
E) forward integration.

Question 72

The initial step to implementing value chain analysis is

A) attaching a cost to each discrete activity.
B) establishing costs in terms of time.
C) establishing costs in terms of money.
D) converting the cost data into information by looking for competitive cost strengths and weaknesses.
E) dividing a firm's operations into specific activities or business processes.

Question 73

The process whereby a firm determines the costs associated with organizational activities from purchasing raw materials to manufacturing products to marketing those products is called

A) the Resource-Based Approach.
B) Value Chain Analysis.
C) Strategic Cost Analysis.
D) the Internal Factor Evaluation Matrix.
E) Cost-Benefit Analysis.

Question 74

Retrenchment would be an effective strategy when an organization

A) has shrunk so quickly that major internal reorganization is needed.
B) is one of the stronger competitors in a given industry.
C) is plagued by inefficiency, low profitability, poor employee morale, and pressure from stockholders to improve performance.
D) has decided to capitalize on opportunities, maximize threats, take advantage of strengths, and overcome weaknesses.
E) does not have a clearly distinctive competence and has failed to meet its objectives and goals consistently over time.

Question 75

Explain each of the five types of bankruptcy: Chapters 7, 9, 11, 12 and 13.

Question 76

Stockton, California, is the largest U.S. city to declare bankruptcy.

Question 77

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 78

Bankruptcy

A) should never be used as a strategy.
B) should be used only when one is legally forced to do so.
C) can be an effective type of retrenchment strategy.
D) should only be used for large firms.
E) should only be used for small, private firms.

Question 79

The Family Farmer Bankruptcy Act of 1986 created which of the major types of bankruptcy?

A) Chapter 7
B) Chapter 8
C) Chapter 9
D) Chapter 12
E) Chapter 13

Question 80

The form of bankruptcy in which all the organization's assets are sold in parts for their tangible worth is

A) Chapter 7.
B) Chapter 8.
C) Chapter 9.
D) Chapter 11.
E) Chapter 13.