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The firm’s overall orientation toward growth, stability, or retrenchment: directional strategy b. The industries or markets in which the firm competes: portfolio strategy c. The achievement of efficiency, quality, innovation, and customer responsiveness d. The manner in which management contributes to and coordinates activities of business units: parenting strategy 2. Which strategy specifies the firm's overall direction in terms of its general orientation toward growth, the industries or markets in which it competes, and the manner in which it coordinates activities and transfers resources among business units? a. corporate b. functional c. divisional d. organizational e. business 3. Strategies that include the flow of financial and other resources to and from a company's product lines and business units can be referred to as a. corporate strategies. b. directional strategies. c. cooperative strategies. d. functional strategies. e. business strategies. 4. Which kind of corporate strategy deals with the firm's overall orientation toward growth? a. portfolio strategy b. directional strategy c. parenting strategy d. cooperative strategy e. functional strategy
cooperative strategy e. functional strategy 6. directional strategy c. growth c. Which kind of corporate strategy deals with the industries or markets in which the firm competes through its products and business units? a. diversification d. acquisitions e. mergers . functional strategy 7. Which external growth strategy involves two or more corporations joining in a stock exchange and from which only one corporation survives? a.5. parenting strategy d. concentration 9. portfolio strategy b. Which kind of corporate strategy deals with the manner in which the firm coordinates activities and transfers resources and cultivates capabilities among product lines and business units? a. expansion 8. directional strategy c. mergers b. parenting strategy d. consolidation d. stability b. Which external growth strategy occurs when a corporation is completely absorbed as an operating subsidiary or division of the acquiring firm? a. retrenchment e. portfolio strategy b. Which one of the following directional strategies is most frequently used in corporations? a. cooperative strategy e. strategic alliances c.
b. An acquisition of company B by company A can be described as a. Which external growth strategy is a partnership of two or more corporations or business units to achieve mutually beneficial strategic objectives? a. concentration 10. A + B = A + B + C 14. A + B = A b. A + B = A + B + C 13. mergers b. A joint venture of companies A and B can be described as a. strategic alliances c. A + B = A + B d. A + B = A + B d. A + B = A + B + C . A + B = C c. A long term contract between companies A and B can be described as a. A + B = C c. A + B = C c. diversification d. acquisitions e. A + B = C c. strategic alliances c. A merger of companies A and B can be described as a. A + B = A b. diversification d. A + B = A + B + C 12. acquisitions e. A + B = A + B d. A + B = A + B d. A + B = A b. concentration 11. A + B = A b.
organizational capacity. c. d. e. full internal vertical integration. d. quasi-integration. The purpose of vertical growth is to a. take over a function previously supplied by a former employer. b. concentration. . tapered integration. d. external vertical integration. c. organizational acquisition. A large and growth-oriented corporation has more clout and influence. c. 16. b. 17. 18. There are more opportunities for advancement and promotion.15. A growing firm can cover up mistakes and inefficiencies because of the increase in cash flow revenue. c. The collection of unused resources of a company is known as a. organizational trash. e. stability. organizational slack. Ford Motor Company's use of company resources to build its River Rouge Plant outside of Detroit so that iron ore could enter into one end of the plant and a finished automobile could exit out of the other end is called a. The most logical strategy for a corporation having a strong competitive position possessing a high market share in a highly attractive industry is a. Which of the following is NOT a reason why the growth strategy is so seductive? a. A large and growing firm attracts more acquisition offers. organizational formula. e. b. d. 19. horizontal integration. b. e. concentric diversification. A corporation that experiences successful growth is thought of positively by the marketplace and potential investors. retrenchment. conglomerate integration.
creates exit barriers. b. transferred integration. 20. d. e. c. creates entry barriers. b. c. c. b. When a firm internally makes 100% of its key supplies and completely controls its distributors. avoids time consuming tasks. d. mass integration. forward integration. acquire a company of similar objective. backward integration. e. take over a function previously provided by a supplier or by a distributor. sell a company encumbered with debt. economical integration. increases the cost of improvement of coordination and control. c. b. A disadvantage of vertical integration is that it a. e. improves coordination of activities. this is known as a. vertical integration. backward integration. The purchase of Carroll's Foods for its hog-growing facilities by Smithfield Foods. 21. The ability for Nike to manufacture its own shoes and then build stores for distribution is an example of a. transferred integration. . mass integration. is an example of a. e. d. horizontal integration. 23. expand to countries with strong trade alliances. d. mass integration. d. e. full integration. strategic integration.b. c. 22. forward integration. the world's largest pork processor. horizontal integration.
the transaction occurs frequently. long-term contract. 28. long-term contracts c. quasi integration 25. forward vertical growth. backwards integration d. b. taper integration e. According to transaction cost economics. A firm that gets most of its requirements from an outside supplier that is under its partial control is what type of vertical integration? a. all of the above are reasons to favor contracting over vertical integration. a high level of uncertainty surrounds the transaction.24. a company's management does not want to rely on outsiders for important raw materials. full integration b. which of the following is NOT a reason for a firm to prefer vertical integration over contracting to purchasing supplies or services in the open market? a. e. quasi integration 26. An agreement between two separate firms to provide agreed-upon goods and services to each other for a specified period of time is known as a(n) a. assets involved in the transaction are highly specialized. . captive company strategy. c. 27. taper integration e. b. backward vertical growth. full integration b. d. A firm's expansion into other geographic locations and/or increasing the range of products and services offered to current markets is called a. A firm that produces part of its own requirements and buys the rest from outside suppliers is what type of vertical integration? a. backwards integration d. long-term contracts c. diversification. e. horizontal integration. d. c.
31. d. Growth through diversification out of an industry into an unrelated industry is called a. horizontal growth. c. b. b. concentration. outsourcing. insourcing. e. horizontal growth. When resources are purchased from outsiders through long-term contracts instead of being made in-house. e. conglomerate diversification. integrated contract. short-term contract. resource allocation.b. this process is referred to as a. binding contract. vertical growth. that a corporation can enter one or more businesses that are necessary to manufacture its own product. concentration. d. synergy is the concept a. d. resource building. d. that two firms can generate more profits together than separately. e. . As defined by the text. c. concentric diversification. resource placement. c. concentric diversification. that supports the acquisition of one corporation by another. e. d. e. b. 29. c. 30. outsourced contract. that involves adding different products or divisions to the corporation. 32. that two functional areas of a corporation can coordinate their work as a team. Adding a related or complementary product to a corporation's business units is called a. c. b. conglomerate diversification. vertical growth.
d. With conglomerate diversification. b. Which strategy is most appropriate as a temporary strategy to enable a corporation to consolidate its resources after prolonged rapid growth in an industry now facing an uncertain future? . c. Key environmental forces are in the process of unpredictable change. The stability strategy is appropriate for all BUT ONE of the following circumstances? a. employee satisfaction. product-market synergy. Emphasis is on financial synergy rather than on the product-market synergy. Appropriate when the industry is in decline. Indicated when managers are primarily concerned with the criterion of return on investment. Most appropriate for reasonably successful corporations in a reasonably predictable environment. similar product offerings. the focus is on a. d. financial considerations.33. e. e. 36. market demand. 37. market demand. c. the focus is on a. May be appropriate corporate strategy when a firm's competitive position is only average and industry attractiveness is low. Appropriate when the industry is facing modest or no-growth potential. Which of the following is NOT descriptive of the characteristics of conglomerate diversification? a. c. Appropriate for companies wishing to take advantage of their competitive position strengths as they diversify out of an unattractive industry. 34. e. product-market synergy. b. With concentric diversification. b. Timing is critical to ensure entry into the industry before competitors. financial considerations. 35. diverse product offerings. economic indicators. Useful in the short-run but can be dangerous if followed too long. d. b. e. d. c.
pause/proceed with caution strategy e. profit strategy 41. profit strategy 40. A form of divestment and is appropriate when corporate problems can be traced to the poor performance of an SBU or product line. pause/proceed with caution strategy e. profit strategy 39. no change strategy c. retrenchment strategy d. no change strategy c. retrenchment strategy d. decreased sales and lost profits? a. horizontal integration strategy b. proceed with caution strategy b. opting to decrease short-term discretionary expenses to maintain profits at a certain level? a. resulting in poor performance. Which strategy is most appropriate for a corporation having a weak competitive position regardless of the industry's attractiveness. pause strategy e. b. no change strategy c. Occurs when the corporation reduces the scope of some of its functional activities and becomes "captive" to another firm. retrenchment strategy d. . Which strategy is most appropriate for a company in an industry in which the future is expected to continue as an extension of the present? a. What is a turnaround strategy? a. no change strategy c. horizontal integration strategy b. pause/proceed with caution strategy e. horizontal integration strategy b.a. profit strategy 38. retrenchment strategy d. Which strategy is descriptive of a corporation in a mature industry facing a drop in its attractiveness.
d. The firm reduces its functional activities to reduce costs. The strategy that takes place in two basic phases of contraction and consolidation is a. It involves adding different products or divisions to the corporation. Emphasizes improving operational efficiency and is appropriate when a corporation's problems are pervasive. but not yet critical. bankruptcy c. Probably most appropriate for a company with a strong competitive position in a growing industry. 42. c. c. e.c. merger. bankruptcy c. diversification . One of its customers makes up a large percentage of the company's sales and wants the company to keep operating as its supplier. Which one of the following is NOT a characteristic of a firm that has chosen a captive company strategy? a. liquidation. b. integration. Which strategy involves giving up management of the firm to the courts in return for some settlement of the corporation's obligations? a. liquidation b. turnaround. e. consolidation 45. divestment. Occurs when a corporation liquidates all its assets. d. Management desperately seeks an "angel" to guarantee the company's continued existence. divestment e. liquidation b. diversification d. 44. b. 43. d. e. The firm gains a certainty of sales and production in return for becoming heavily dependent upon another firm for at least 75% of its sales. Which strategy is the termination of the firm because it is in an unattractive industry and the company is too weak to be sold as a growing concern? a.
its market share divided by that of the largest other competitor. or corporation is defined as a. 2. 1. its market share divided by that of the smallest other competitor. . 49." e. "stars. c. "question marks. market lagger. is set at a. d." c. its market share multiplied by that of its nearest competitor. b. market challenger. b.0." 50. The line separating areas of high and low relative competitive position as gained from the BCG growth-share matrix method." b. 1. 0. 2. e.0. b. e. 47. largest competitor. e.5. division. In the Boston Consulting Group's growth-share matrix.5. d. c. d. divestment e. New products which are typically introduced in a fast-growing industry are called a. belongs to the a. A market share ratio above 1.5. "dogs.d. its gross sales divided by its market share. cash cows. consolidation 46. market leader. its market share. The growth-share matrix of the Boston Consulting Group suggests that the excess cash being generated by "cash cows" should be used to fund a. c. 48. the relative competitive position of a product. calculated by the Boston Consulting Group's growthshare matrix method.0. "buckets." d. smallest competitor. "white knights.
the key to success is a. market share. dogs. Those products with low market share that do NOT have the potential to bring in much cash are called a. question marks. 51. c. c. c. Products that typically bring in far more money than is needed for maintenance of their market share are called a. c. dogs. lost leaders. effective management. e. lost leaders. cash cows. lost leaders. e. stars. dogs. 52. stars. According to the BCG growth-share matrix. cash cows. cash cows. d. e. question marks. question marks. industry leadership. dogs. d. d. stars. 54. competitive positioning. 53. lost leaders. c. b. b.b. question marks. d. b. b. stars. The BCG growth-share matrix has been criticized because . d. e. e. innovative initiative. Market leaders typically at the peak of their product life cycle and usually able to generate enough cash to maintain their high share of the market are called a. 55.
the categories are too few. The GE Business Screen has been criticized because a. 0. market growth rate d. 1. market share b. industry profitability 57. b. it can get quite complicated and cumbersome. it fails to operationalize industry attractiveness and business strength/competitive position. d. 1.00 (weak) to 5. market size c. 59.0 (strong). high growth markets may not always be the best markets. c. 56. e. pricing practices e.0 (weak) to 10.0 (weak). c.0 (weak).00 (strong) to 5. d. Which of the following is defined by GE as one of the variables forming business strength/competitive position? a.0 (weak) to 7. b. competitive diversity c. it uses too many categories. it is a primitive version of the Directional Policy Matrix. e. The range of scores for the business strength axis of the GE Business Screen is from a.0 (strong) to 10. 1. market share 58. Which of the following is NOT defined by GE as one of the variables forming industry attractiveness? a. market growth rate d. b. 0. . it emphasizes marketing expenditures over profits. product quality is only one aspect of overall competitive position. industry profitability b. d. market size e. it is based on the product life cycle.0 (strong). c.a.0 (strong).
63. value trap businesses. b. e. d. It relies too heavily on objective judgments. those businesses which are opportunities for improvement by the parent and the parent clearly understands their critical success factors well are called a. c. the cash flow among its business units. The graphic depiction facilitates communication. the core competencies of the parent corporation and on the value created from the relationship between the parent and its units. b. ballast businesses. It provides an illusion of scientific rigor. d. Which of the following is NOT one of the limitations of portfolio analysis? a. Which of the following is NOT one of the advantages of portfolio analysis? a. d. e. It stimulates the use of externally oriented data to supplement management's judgment. It contains value-laden terminology. 61. alien territory businesses. b. 62. or retrenching. d. It suggests the use of standard strategies which may be impractical or may miss potential opportunities. It is not easy to define product/market segments. c. c. It provides the basis for impartial objectivity from which to make decisions. heartland businesses. whether a business unit should be growing. b. e. Corporate parenting generates corporate strategy by focusing on a. it is only appropriate for new products or SBUs in developing industries. c. According to the parenting-fit matrix. 60. edge-of-heartland businesses. stabilizing.e. It raises the issue of cash flow availability for use in expansion and growth. acquiring distinctive competencies in the marketplace. It encourages top management to evaluate each of the corporation's businesses individually. . e. differentiating its activities into separate units and integrating these activities through complex integrating mechanisms.
portfolio strategy. a. Business firms that compete with each other not only in one business unit. Corporate strategy deals with the choice of direction for the firm as a whole. d. c. 65. d. False 68. True b. value trap businesses. vertical strategy. e. hierarchical strategy. but from which only one corporation survives. A corporate strategy that cuts across divisional boundaries to build synergy across business units to improve the competitive position of one or more business units is called a. True . e. False 69. but contain very few opportunities to be improved by the parent are called a. horizontal competition. b. pyramid strategy. horizontal strategy. ballast businesses. According to the parenting-fit matrix. Corporate parenting is the coordination of cash flow among units. e. laissez-faire competition. oligopolistic competition. d. A merger is a transaction involving two or more corporations in which stock is exchanged. a. multipoint competition. alien territory businesses. strategic competition. c.64. c. 67. a. but in a number of related business units are said to be engaging in a. b. heartland businesses. b. edge-of-heartland businesses. those businesses which fit very comfortably with the parent corporation. 66. True b.
a. False 70. a. True b. True b. False 72. False 73. a. False 77. True b. BCG stands for Boston Consulting Group.b. False 74. True b. A no change strategy is a decision to do nothing new in a worsening situation. True b. A turnaround strategy emphasizes the improvement of operational efficiency and is probably more appropriate when a corporation's problems are pervasive. False 75. Conglomerate diversification is diversifying into an industry unrelated to its current one. a. True b. True b. but not yet critical. but instead to act as though the company's problems are only temporary. False 76. True b. Bankruptcy is the termination of the firm. False 71. a. a. Vertical integration is going backward on an industry's value chain. a. Forward integration is the degree to which a firm operates vertically in multiple locations on an industry's value chain from extracting raw materials to manufacturing to retailing. a. Bankruptcy involves giving up management of the firm to the courts in return for some settlement of the corporation's obligations. False .
False 82. True b. a. and economic and political factors. True b. True b. The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position. the market rate of growth. a. cash cows always become stars. One disadvantage of portfolio analysis is that it provides an illusion of scientific rigor. False 81. a. Cash cows are market leaders typically at the peak of their product life cycle and are usually able to generate enough cash to maintain their high share of the market. The competitive strength of a product is based only on its market share. False 80. False 84. True b. True b. a. False 83. True b. a. True b. False 79. the extent and type of government regulation. A company's attractiveness is composed of its market size. Eventually. a. One advantage of portfolio analysis is that it is not easy to define product/market segments. False . a.78.
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