You are on page 1of 21

CH 1 Study Quiz master 1. (p. 8) According to the text, the strategic management process entails three ongoing processes: A.

analyses, actions, and synthesis. B. analyses, decisions, and actions. C. analyses, evaluation, and critique. D. analyses, synthesis, and antithesis.

2. (p. 9) The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives. B. strategy must be focused on long-term objectives. C. strategy must be focused on one specific area of an organization. D. strategy must focus on competitor strengths. 3. (p. 9) The four key attributes of strategic management include all of the following EXCEPT: A. including multiple stakeholder interests in decision making. B. incorporating both short-term and long-term perspectives. C. recognizing the trade-offs between effectiveness and efficiency. D. emphasis on the attainment of short-term objectives.

4. (p. 10) "Effectiveness" is often defined as
A. doing things right. B. stakeholder satisfaction. C. doing the right thing. D. productivity enhancement.

5. (p. 15) The three participants in corporate governance are
A. the shareholders, board of directors, and employees. B. the shareholders, labor unions, and employees. C. the shareholders, board of directors, and management. D. the shareholders, banks and lending institutions, and management.

6. (p. 15) While working to prioritize and fulfill their responsibilities, members of an organization's
board of directors should A. represent their own interests. B. represent the interests of the shareholders. C. direct all actions of the CEO. D. emphasize the importance of short-term goals.

7. (p. 15) Members of Boards of Directors are
A. appointed by the Securities and Exchange Commission. B. elected by the shareholders as their representatives. C. elected by the public. D. only allowed to serve one term of four years.

8. (p. 16) An organization is responsible to many different entities. In order to meet the demands of
these groups, organizations must participate in stakeholder management. Stakeholder management means that A. interests of the stockholders are not the only interests that matter. B. stakeholders are second in importance to the stockholders.

C. stakeholders and managers inevitably work at cross-purposes. D. all stakeholders receive financial rewards.

9. (p. 17) There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum
thinking means that A. all parts of the organization gain at no loss. B. in order for someone to gain others must experience no gain or benefit. C. one can only gain at the expense of someone else. D. everyone in the organization shares gains and losses equally. 10. (p. 21) Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is A. the expectation that business will strive to improve the overall welfare of society. B. the idea that organizations are solely responsible to local citizens. C. the fact that court costs could impact the financial bottom line. D. the idea that businesses are responsible to maintain a healthy social climate for their employees. 11. (p. 23) According to the text, the "triple bottom line" approach to corporate accounting includes three components: A. financial, environmental, and customer. B. financial, organizational, and customer. C. financial, environmental, and social. D. financial, organizational, and psychological. 12. (p. 25) Strategy formulation and implementation is a challenging ongoing process. To be effective, it should involve A. the CEO and the board of directors. B. the board of directors, CEO, and CFO. C. line and staff managers. D. all of these. 13. (p. 25) Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? A. only at the top B. in the middle C. throughout the organization D. only during times of change 14. (p. 26) The hierarchy of organizational goals is in this order (least specific to most specific): A. vision statements, strategic objectives, mission statements. B. mission statements, strategic objectives, vision statements. C. vision statements, mission statements, strategic objectives. D. mission statements, vision statements, strategic objectives. 15. (p. 26) Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements A. are very specific. B. provide specific objectives. C. set organizational structure.

B. financial objectives and projected figures. D. C. and "Restoring patients to full life" (Medtronic). B. vision statement. vague statement of direction. B. evoke powerful and compelling mental images. 30) Fortune Brands states they will "cut corporate overhead costs by $30 million a year. (p. cause debate and increase conflict. line manager's individual goal. C. 21. 20. (p. Strategic objectives A." This is an example of a A. be less detailed. mission statement. 26) Effective vision statements include A. encompass both the purpose of the company as well as the basis of competition. D. B. 17. nonfinancial strategic objective. D." This is an example of a A. 30) An organization's mission statement and vision statement set the overall direction of the organization. are only clarified by the board of directors. its mission should A. conflicts can arise between functional areas. strategic posturing and future objectives D. operationalize the mission statement. D. (p. A. all strategic directions of the organization. operational objectives 18. (p. C. In order to resolve these conflicts. 29) In contrast to an organization's vision. . financial strategic objective. (p. help resolve conflicts through their common purpose. D. align departments toward departmental goals. be shorter in length. B. modify the mission statement. 19. B. strategic objectives A. (p.D. vision statements B. C. put financial objectives above human considerations. C. (p. encompass all the major rules and regulations of the corporate work force. are a shorter version of the mission statement. strategic objectives D. C. 28) Examples of __________ include: "To be the happiest place on earth" (Disneyland). 22. vision statement. a brief statement of the company's direction. strategic objective. 28-29) WellPoint Health Network states: "WellPoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future. mission statements C. 16. 32) In large organizations.

(p. D.39. B. A. (p. Environmental scanning B. (p. B. 47) The aging of the population. (p. sequences of events. the expense of collecting the necessary data exceeds the benefit. Environmental surveying D. Environmental monitoring C. 42) Gathering "competitive intelligence" A. 41) Scanning the general environment would identify information on A. 49-50) Emerging sociocultural changes in the environment include . 4. B. sociocultural changes. D. in most cases. it can create legal problems for the firm if regulators discover the company is making forecasts. macroeconomic changes. political and legal environmental changes. technological developments. and effects of the baby boom are A. customer and firm bargaining power." D. C. B. competitive rivalry. or streams of activities. 44. 43. 45) A danger of forecasting discussed in the text is that 4 A. demographic changes. 42) _____________ tracks the evolution of environmental trends. substitute goods. Competitive intelligence 2. 42. 38. 45. 6. (p. the aging population and ethnic shifts. C. (p. 3.CH 2 1. is considered unethical. 5. minimizes the need to obtain information in the public domain. is illegal. C. (p. managers may view uncertainty as "black and white" while ignoring important "gray areas. is good business practice. D. demographic changes. D. B. changes in ethnic composition. C. forecasting's retrospective nature provides little information about the future. 7. 49) Increasingly larger numbers of women entering the work force since the early 1970s is an example of A. sociocultural changes.40. C. global changes.

Increased competitive intensity. volume of purchase is low. A. economic C. 56) Which of the following would be an entry barrier? /0A. D. 57. (p. progressively less disposable income by consumers. political/legal. threat of backward integration by buyers is low.A. macroeconomic. These measures lead to higher prices for U. D. Higher unemployment rates. the increasing educational attainment of women in the past decade. 52. Recent technological innovation. low economies of scale. C. (p. low switching costs C. 9. high differentiation among competitors' products and services. C. economic D. D. forward integration. (p. 57) The bargaining power of the buyer is greater than that of the supplier when A. Increased bargaining power of the firm's suppliers. new entrants cannot differentiate their products. Increased deregulation in an industry. macroeconomic. backward integration. 47. (p. high capital requirements. global. macroeconomic. C. consumers and fuel inflation (__________). political/legal B. D.S. 55) Which is considered a force in the "Five-Forces" model? A. Rivalry among competing firms. 13. trade deficits (__________) has led to greater demand for protectionist measures. Decreased entry barriers. B. D. cost savings from the supplier's product are minimal. 11. C. (p. macroeconomic. 56. changes in the geographic distribution of the population. low capital requirements B. C. 56) Product differentiation by incumbents act as an entry barrier because A. new entrants will have to spend heavily to overcome existing customer loyalties. B. D. B. (p. 47) Which of the following would be considered part of a firm's general environment? A. 51) To illustrate interrelationships among different segments of the general environment: The persistence of large U. D. 55. (p. it helps a firm to derive greater economies of scale. B. 16. high switching costs. 54. technological. large economies of scale D. This is an example of A. 15. (p. easy access to raw materials 14. 53.S. C. changes in the ethnic composition. product differentiation. 55) A large fabricator of building components purchased a steel company to provide raw materials for its production process. the buyer's profit margin is low. C. 57) Buyer power will be greater when . incumbents will take legal action if new entrants do not differentiate their products. 56) The threat of new entrants is high when there are A. The threat of government intervention. B. 50. 49. economies of scale. B. (p. 8. economic 10. such as trade barriers and quotas (__________). sociocultural. 12. B.

65. all of these. C. there are high switching costs. it is concentrated or purchases large volumes relative to seller sales. B. lowers switching costs. threat of entry. all of these. B. gather to form a cooperative to sell their products to buyers directly. 58. C. threat of substitute products. increases output per unit of cost. 72. dominance by a few suppliers. B. numerous equally balanced competitors. D. 55) An independent group of suppliers. B. introduces new ways to accomplish the same task. B. B. 61. the threat of substitutes is heightened because the Internet A. D. 24. slow industry growth. 21. more suppliers enter the market. D. 71. by highlighting a firm's unique sellinadvantages . C. D. specialized assets with no alternative use. 23. (p. D. numerous equally balanced competitors. 60) Exit barriers arise from A. few competitors. 18. 68. high fixed or storage costs. (p. the products purchased are highly differentiated. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over D. (p. likely to have greater bargaining power because of the Internet. readily available substitute products. lack of differentiation. lowers barriers to entry. 19. the final consumers in a distribution channel. C. high fixed or storage costs. by making competitors in cyberspace seem less equally balanced C.A. (p. 64) In general. the industry's product is very important to the quality of the buyer's end products or services. B. This is an example of A. 59. such as farmers. lack of importance of the buyer to the supplier group. C. (p. replacing their former distributor. governmental and social pressures. a high level of differentiation. 58-59) In Porter's Five-Forces model. by shifting customers away from issues of price B. D. 63) End users are A. high differentiation by the supplier. B. 22. manufacturing capacity increases only in large increments. 65) How do infomediaries and consumer information websites increase the intensity of competitive rivalry? A. switching costs for buyers decrease. D. low exit barriers. C. 20. (p. 59-60) The most intense rivalry results from A. C. usually the C in B2C. conditions under which a supplier group can be powerful include all the following EXCEPT A. importance of buyers to supplier group increases. 58-59) The bargaining power of suppliers increases as A. backward integration. 17. (p. (p. strategic interrelationships with other business units within the same company. C. slow industry growth. threat of forward integration by suppliers increases. D. forward integration. 66.

Reduced raw material storage costs. C. repair and parts supply. machining and packaging. support. primary B. promotion and packaging. 81.Assessing the Internal Environment of the Firm Chapter 03 Assessing the Internal Environment of the Firm 1. B. secondary D. C. Which of the following is a primary activity? A. support 4. primary. Recruiting and training employees. 2. A. B. D. 86) In value-chain analysis. (p. support. D. 83) Which of the following is not an advantage of Just-In-Time inventory systems? A. warehousing and inventory control. Minimized idle production facilities and workers. Supply of replacement parts is a __________ activity. Monitoring the cost of producing the product through a cost accounting system. . B. primary. Repairing the product for the consumer. (p. (p. (p. the activities of an organization are divided into two major categories of value activities: primary and support. 3.CH3 Chapter 03 . 83) Inbound logistics include A. primary C. 83-85) Advertising is a __________ activity. 81. Purchasing key inputs.

financial resources. differentiate service.C. This is an example of their A. marketing expertise increasing a firm's revenues and enabling it to enter new markets. material handling. C. (p. outstanding customer service. order processing. and organizational structure. D. A. D. 93-94) The three key types of resources that are central to the resource-based view of the firm's are A. physical resources. 12. metallurgy. information systems have been a source of competitive advantage by enabling them to A. (p. innovativeness of products. intangible resources. (p. D. D. (p. procurement of critical supplies. 86-87) Which of the following is a support activity? A. strong primary activities. product promotion. tangible resources. B. Tangible resources B. 8.such as trust and effective work teams. intangible resources. Reduced dependence on suppliers. and reputation. Examples include all of the following EXCEPT A. 10. They consist of warehousing. financial resources. tangible resources. negotiating and maintaining ongoing relations with regulatory bodies. (a chain of drugstores). D. B. D. 94) Examples of tangible resources (in the resource-based view of the firm) include: A. human resources. 86) Customer service would include A. B. respond to consumer needs. D. D. Technology development.product distribution C. Customer service. financial resources. and distributing the product or service to buyers. Intangible resources C. Outbound logistics D. (p. Inbound logistics. and top management. C. Reputational resources capabilities unparalleled success in the wet shaving industry. tangible resources. Operations. 7. B. delivery operation. Operations 6. physiology. (p. all of these. tangible resources. C. physical resources. Organizational 13. 89) Although general administration is often viewed only as overhead expense. and firm competencies. (p.g. effective information systems contributing significantly to a firm's overall cost leadership strategy.. storing. and organizational capabilities. Inbound logistics C. intangible resources. 5. 95) __________ are typically embedded in unique routines and practices that have evolved and accumulated over time . intangible resources. B. 11. and the capacity to combine intangible resources. culture. B. it can become a source of competitive advantage. physics) to attain . and technological resources. parts supply. tangible resources. intangible resources. D. C. and scheduling. (p. B. top management providing a key role in collaborating with important customers. Reduced work-in-process inventories. C. (p. A. 89) For firm's such as Walgreen Co. 9. 95) Gillette combines several technologies (e. 84) ___________ is/are associated with collecting. Services B. C. automate some operations. organizational capabilities.

. financial analysis and a firm's reputation. (p. This is an example of A. B. 95) __________ are the competencies or skills that a firm employs to transform inputs into outputs. Leverage ratios. (p. competitive parity. D. social complexity. B. customer perspective. profit margin. Intangible resources C. B. B. 100-101) A resource is valuable and rare but neither difficult to imitate nor without substitutes. (p. 105) The best measure of a company's ability to meet imminent financial obligations is known as the A. Profitability ratios. C. 20. social complexity. 108) The balanced scorecard enables managers to consider their business from all of the following perspectives EXCEPT A. This should enable the firm to attain A. short-term perspectives and strategic positioning. its short-term financial obligations? A. 18. C. debt ratio. 107) The "balanced scorecard" provides top managers with a __________ view of the business. Liquidity ratios. internal perspective. ethical perspective. innovation and learning perspective. C. no competitive advantage. Activity ratios. current ratio. D.14. 16. 17. C. Reputational resources D. the key emphasis on customer satisfaction and financial goals are only a means to that end. D. 22. D. intangible resources and operational measures. causal ambiguity. (p. D. tangible resources. managers should not look at their job as primarily balancing stakeholder demands. Organizational capabilities 15. D. (p. B. (p. 105) Which of these categories of financial ratios is used to measure a company's ability to meet C. D. increasing satisfaction among multiple stakeholders can be achieved simultaneously. A. physical uniqueness. 19. B. 23. Tangible resources B. C. simple and routine D. a temporary competitive advantage. A. path dependency. Such competitive advantages are based upon A. physical uniqueness. path dependency. managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. 108) The "balanced scorecard" developed by Kaplan and Norton helps to integrate A. its culture. and its reputation with its suppliers and customers. 98) A crash R&D program by one firm cannot replicate a successful technology developed by another firm when research findings cumulate. long-term financial 21. D. financial analysis and stakeholder perspectives. C. (p. 109) An important implication of the "balanced scorecard" approach is that A. fast but comprehensive C. (p. B. (p. total asset turnover. gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction. detailed and complex B. 98) A variety of firm's resources include interpersonal relations among managers in the firm. a sustainable competitive advantage. C. B. (p.

search. return. 39. 37. and delivery. problem-solving. In the knowledge economy. A. repair. D. search. 116-117) Four Internet-based activities that are enhancing firms' capabilities to use the Internet to add value include A. evaluation. and returning. rescue. C. the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets. intangible resources to tangible resources. bill-paying. tangible resources to intangible resources. (p. evaluating. problem-solving. strategic management must focus on different aspects of the organization. Recently. if a large portion of a firm's value is in intellectual and human assets. bill-paying. be smaller than C. B. be larger than D. strategic management has moved from focusing on A. customizing. working capital to fixed capital. not be correlated with 2. As the competitive environment changes. be equal to B. B. C. and transaction HTMLImage CHAPTER 4 STUDY QUIZ 1. outsourcing. .24.

is found mostly at the lower levels of the organization. 45. B. and skills. knowledge. decreased C. Tacit knowledge 7. D. Tacit knowledge A. A. an individual's capabilities. Intellectual capital D. can be accessed only with the consent of the employees because it is in the minds of the employees. Physical capital B. Managing a knowledge intensive workforce is very challenging. no correlation when 9. Human capital B.D. increased B. 42. remained the same D. 43. Social capital C. Which of the following firms would you expect to have the highest ratio of market value to book value? A. 3. fixed capital to working capital. Human capital includes A. 44. the output from assembly line employees. 41. B. __________ can be defined as the "network of relationships that individuals have throughout the organization. D." A. Emotional capital 6. A. C. Social capital D. an improved product. The best way for a firm to manage its workforce is to . __________ includes creativity and problem solving ability. can be codified but not reproduced. International Paper D. C. Google C. Nucor (steel) 4. 8. Union Pacific (railroad) B. 47. 5. 49. the relationships between people. Human capital C.. Recently. is the same as explicit knowledge. a knowledge worker's loyalty to his or her employing firm has __________ compared to his or her loyalty to his or her profession and colleagues.

attract the brightest employees. Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons: A. 11. an employee who moves too much can be identified as unreliable and eliminated. C. __________ rate a person's skill and performance. ensure that it pays higher salaries than its rivals. C. requiring employees to sign agreements that prevent them from working for competitors in the future. B. superiors B. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters. C. This can be accomplished through A. The least effective way to retain human capital is A. current employees are normally very careful in recommending someone because their credibility is on the line. retain knowledge workers. it is a good test of employee loyalty. 14. 10. it is less expensive than the fees paid to headhunters. they want to keep highly mobile employees motivated and challenged. . C. If a firm has strong human capital. 62. balance efforts in the attraction. 51. A. direct reports C. Human capital and social capital are vital for superior firm performance. they want to encourage job rotation. 60. if an employee is in the same department for too long. selection. colleagues D. providing employees with a challenging and stimulating work environment. encouraging workers to work independently of each other. D. all of these 12. decreasing the interaction of departments within the firm. C. D. D. B. D. 58. B. encouraging employee identification with organizational mission and goals. The most important reason they do this is because A. 55. structuring the firm with clearly defined departmental and employee divisions. B. and retention of top talent. providing employees with financial and nonfinancial rewards and incentives. he/she would become indispensable.A. the firm may exploit this by building social capital. Many successful firms use internal labor markets. D. encouraging the sharing of ideas between employees in the firm. In a 360-degree evaluation and feedback system. 13. B.

D. Firms leverage their social capital in an effort to create competitive advantages. e-mail) has increased in recent years in many organizations. individuals may become less willing to collaborate on joint projects. is always beneficial to a firm. 18. create smaller social networks. access to diverse skill sets. access to private information. social capital may both breed "groupthink" and the socialization processes to create it (orientation. B. greater power. D. a tendency not to question shared beliefs. A firm's social capital is based on A. B. firms may attract the symbolic leader of a group within a competing firm and hope others will follow. D. the relationships among a firm's employees. D. the "Columbus effect. usually restricts the productivity of employees. high social capital may breed "groupthink. according to the text. Advantages of effective social networks for career success include all of the following EXCEPT A. D. strategically competitive hiring. training. 17. Among the downsides of social capital is/are: A. Social capital has many potential benefits. C. 68. C. restrict social network growth. .. an individual's knowledge. In an effort to capture key employees from competitors. 72. B. high upfront costs and subsequent high variable costs.e. knowledge integration. may or may not be beneficial to a firm. B. 63. Social capital is a source of strength to many firms. 19." C.15. B. However." B. the "Pied Piper effect. social capital A. 20. The creation of knowledge assets is typically characterized by A. 21. C. .g. communicate information efficiently. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive.. etc. high fixed costs and high variable costs. This has helped to A. a firm's allocation of financial resources. C. an employee's individual abilities. B. always hurts firm performance. 69. 71." i.) can be expensive. C. This has been termed A. The use of information technology (e. greater redundancy in knowledge sources. 16. D. 64. make more effective use of time in every situation.

maximizing risk-return tradeoffs through diversification.C. 3. 161) The primary aim of strategic management at the business level is A. D. high upfront costs and low variable costs. C. D. (p. 162-163) Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle. (p.Business-Level Strategy: Creating and Sustaining Competitive Advantages 1. copyrights and trademarks. C. low upfront costs and high variable costs. 164) Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy? . (p. B. The management of intellectual property involves all of the following EXCEPT A. 22. Chapter 05 . True / False 2. B. converting explicit knowledge to tacit knowledge. D. maximizing differentiation of products and/or services. achieving a low cost position. patents. achieving competitive advantage(s). contracts with confidentiality and noncompete clauses. 74.

7. Differentiation. C. overall cost leadership C. differentiation B. D. 170) Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. (p. 168) Convincing rivals not to enter a price war. Cost cutting may lead to the loss of desirable features. C. . C. Stuck-in-the middle. 168-169) Which of the following is a risk (or potential pitfall) of cost leadership? A.A. 8. perceptions of differentiation may vary between buyers and sellers. (p. 174) A firm following a focus strategy A. too high a price premium. increasing economies of scale. having brand-loyal customers become more sensitive to prices. (p. 171) A differentiation strategy enables a business to address the five competitive forces by A. lessening competitive rivalry by distinguishing itself. B. 9. uniqueness that is not valuable. must focus on a market segment or group of segments. D. Differentiation focus. must focus on the rising cost of inputs. must focus on governmental regulations. (p. D. C. (p. C. B. (p. all rivals share a common input or raw material. C. 172-174) All of the following are potential pitfalls of a differentiation strategy EXCEPT: A. B. D. serving a broader market segment. 6. 5. protection from customer pressure to lower prices. Differentiation. Cost leadership focus. B. differentiation focus D. Differentiation focus. B. Overall cost leadership. stuck-in-the-middle 4. D. Producers are more able to withstand increases in suppliers' cost. Overall cost leadership. Attempts to stay ahead of the competition may lead to gold plating. and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. Cost differences increase as the market matures. B.

reducing business travel 14. 175-176) All of the following are potential pitfalls of a focus strategy EXCEPT A. B. profit outsourcing 12. 178-179) All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT: A. 183) Which of the following is NOT one of the ways the Internet is lowering transaction costs? A. focusers can become too focused to satisfy buyer needs. evaluating employee performance C." B. (p. celebrity endorsements B. profit maximizer B. 13. mass customization 15. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage. profit pool D. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation. C. exceptional service D. incumbent firms are entering market segments that they previously considered to be too small. C. A. minimizing office expenses D. (p. underestimating the challenges and expenses associated with coordinating valuecreating activities in the extended value chain. 11. (p. firms that fail to attain both strategies may end up with neither and become "stuck-inthe-middle. 10. (p. B. miscalculating sources of revenue and profit pools in the firm's industry. D. D. revenue enhancer C. 185) One of the reasons the Internet is eroding sustainable competitive advantages is A. (p. all rivals share a common input or raw material. eliminating supply chain intermediaries B. . targeting too large a market that causes unit costs to increase. erosion of cost advantages within the narrow segment. 183) Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. (p.D. 177) A __________ can be defined as the total profits in an industry at all points along the industry's value chain. prestige packaging C. must avoid entering international markets.

C. exiting D. maturity D. C. decline 18. there are many segments. 16. (p. introduction B. 189) As markets mature. Advantages that cannot be duplicated by other competitors are difficult to achieve. introduction B. (p. growth C. maintaining B. __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly. competition is very intense. "in-kind" competition (from the same type of product). consolidating 21. (p. A. application for patents increase. maturity D. the intensity of competition is low. D. D. D. 188) In the __________ stage of the industry life cycle. there is increasing emphasis on efficiency. B. differentiation opportunities increase. (p. Some competitors enjoy a significant operating advantage due to increasing experience effects. C. premium pricing. B. A. The market supports premium pricing. 187) In the __________ stage of the industry life cycle. C. retaliation by competitors whose customers are stolen . (p. 189) Which of the following is most often true of mature markets? A. A. firms are ignoring opportunities to offer high-end services in niche markets. A. which attracts additional competitors. B. The magnitude of pricing differences and product differentiation is larger than in the 20. 189) The growth stage of the industry life cycle is characterized by A. the emphasis on product design is very high. and the emphasis on process design is high. a growing trend to compete on the basis of price. growth C. D. and the market growth rate is low. 192) During the decline stage of the industry life cycle. 19. costs continue to increase. decline 17. harvesting C. (p. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success.

(p. 206) Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. C. 34. using portfolio analysis. how these businesses can achieve synergy. . (p. D. (p. B. the application of technology. 206-207) For a core competence to be a viable basis for the corporation strengthening a new business unit. C. B. there are three requirements. This justification for diversification is best described as A. increase shareholder wealth. reducing corporate risk.CHAPTER 6 31. B. The new business must be similar to existing businesses to benefit from a core competence. 201) Corporate-level strategy addresses two related issues: A. how to compete in a given business. D. how to improve a firm's infrastructure. what businesses to compete in. 37. capitalizing on core competencies. how to maintain ethical behavior. The competence must help the business gain strength relative to its competition. Which one of the following is not one of these requirements? A. utilizing common infrastructures. how to integrate primary activities.

40. (p. 42. B. Corporate level D. D. (p. 212) Unbalanced capacities that limit cost savings.C. D. B. costs and expenses associated with increased overhead and capital expenditures. The new business must have an established large market share. providing a more stationary position in the competitive environment. D. 216) Portfolio management matrices are applied to what level of strategy? A. difficulties in combining specializations. sharing activities. D. customer needs are evolving. International level . (p. flexibility is reduced. the firm's suppliers of raw materials are often unable to maintain quality standards. the minimum efficient scales of two corporations are different. and reduced flexibility are disadvantages associated with A. additional administrative costs associated with managing a more complex set of activities. strategic alliances. 44. leveraging core competencies. 213) A firm should consider vertical integration when A. This is an example of A. increases its control over raw materials by producing much of its own polypropylene fiber. a key input into its manufacturing process. 210) Shaw Industries. D. C. 212) The risks of vertical integration include all of the following EXCEPT A. (p. (p. so that they cannot be easily imitated. the competitive situation is highly volatile. (p. B. the firm's suppliers willingly cooperate with the firm. a giant carpet manufacturer. C. B. problems associated with unbalanced capacities along the value chain. The collection of competencies should be unique. C. B. C. pooled negotiating power. vertical integration. 43. vertical integration. lower transaction costs and improved coordination are vital and achievable through vertical integration. Departmental level B. D. 50. C. divestment. 41. 214) It may be advantageous to vertically integrate when A. lack of control over valuable assets. Business level C. various segregated specializations will be combined. horizontal integration.

poison pill D. (p.Internal development. 227) A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. enabling managers to focus their efforts more directly on the firm's core businesses. scorched earth 68. 217) In managing a firm's portfolio. divestment. internal development. joint diversification. acquisitions C. Strategic alliances. "question marks" can represent future "stars" if their market share is increased. "dogs" should be invested in to increase market share and become cash cows. greenmail C. C. C.54. relatively low market share and low market growth. C. D. global integration. 65. 55. 228) __________ may be time consuming and. (p. B. mergers. Strategic alliances. the BCG matrix would suggest that A. B. strategic alliance. B. high market growth and relatively high market share. D. joint ventures D. 232) An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called A. golden parachute B. "stars" are in low growth markets and can provide excess cash to fund other opportunities. therefore. low market growth and relatively high market share. A. internal development B. "cash cows" require substantial cash outlays to maintain market share. (p. a poison pill. This is an example of A. 61. (p. 232) An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. (p. refers to a business that has A. 225) Divesting businesses can accomplish many different objectives. Mergers. (p. B. providing the firm with more resources to spend on more attractive alternatives. 217) A "cash cow. joint ventures. relatively low market share and high market growth. . firms may forfeit the benefits of speed that growth through __________ and __________ can provide. including A. raising cash to help fund existing businesses. (p. mergers. A. C. B. D." referred to in the Boston Consulting Group Portfolio management technique. D. 60. greenmail. all of these. strategic alliances 67.

D. 232) The term "golden parachutes" refers to A. C. (p. B.C. 69. a clause requiring that huge dividend payments be made upon takeover. scorched earth. D. pay given to executives fired because of a takeover. . managers of a firm involved in a hostile takeover approaching a third party about making the acquisition. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. a golden parachute.