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1. Corporate level strategy is developed by the _____.
b. CEO and other top managers
c. managers of the various business units as a group
d. finance department
CEO and other top managers
1. The corporate strategy formulation activities typically include all of the following except _____.
a. setting the direction of the entire organization
b. selecting in which business to compete
c. using tactics for diversification
d. managing corporate resources and capabilities
e. establishing a marketing budget
establishing a marketing budget
1. Concentration refers to _____.
a. virtually all of a firm’s resource investments in a single business area
b. diversification that stems from common markets, functions served, markets or technologies
c. diversification that is not based on commonality among the activities of a corporation
d. reducing the firm’s business definition combined with refocusing on things that the firm does well
e. involvement in multiple stages of the industry supply chain
virtually all of a firm’s resource investments in a single business area
1. The benefits of the concentration corporate level strategy include all of the following except _____.
a. allowing the firm to master one business
b. allowing managers to develop an in-depth knowledge of the business
c. better positioning to develop the resources and capabilities necessary to establish competitive advantage
d. helping the firm overcome any instability in industry
e. less ambiguity about strategic direction
helping the firm overcome any instability in industry
1. The potential problems that can impact a concentration corporate strategy include all of the following except _____.
a. the primary product can become obsolete
b. difficulty growing as an industry matures
c. focusing on a single industry which results in too much knowledge about that single industry
d. problematic cash flow concerns
e. difficulty adapting to industry change
focusing on a single industry which results in too much knowledge about that single industry
1. Successful firms in a given industry _____.
a. will pursue a very similar strategy
b. do not pursue vertical integration
c. pursue internationalization
d. are first movers
e. may pursue a wide variety of strategies
may pursue a wide variety of strategies
1. The advantages of vertical integration include all of the following except _____.
a. avoiding excess capacity at different levels of integration
b. reducing duplicate overhead
c. controlling inventory needs
d. avoiding price shopping
e. improving competitive intelligence
avoiding excess capacity at different levels of integration
1. If Wal-Mart were to purchase a fleet of trucks, this would be an example of____.
a. forward integration.
b. backward integration.
c. concentric diversification.
d. conglomerate diversification.
e. market penetration.
1. All of the following are potential sources of synergy from related diversification except _____.
a. common parts designs
b. shared R&D programs
c. financial portfolio model
d. shared distribution channels
e. similar industry experience
financial portfolio model
1. The benefits associated with synergy are greatest when _____.
a. the cost related to corporate level administration is lowest
b. the cost related to corporate level administration is not changed
c. the cost related to corporate level administration is greatest
d. unrelated diversification is justified
e. the top management team must be supportive of diversification
the cost related to corporate level administration is greatest
1. Large unrelated firms are called _____.
b. business alliances
d. joint ventures
e. synergistic groupings
1. Forces that undermine synergies include all of the following except _____.
a. shared R&D programs
b. too little effort to coordinate between businesses
c. additional layers of management
d. industry evolution
e. incompatible cultures
shared R&D programs
1. For corporations the best performance results are produced by _____.
a. unrelated diversification
b. related diversification
c. mergers and acquisitions
d. tangible assets
e. domestic only focus
1. The benefits of an acquisition include all of the following except _____.
a. a quick means to enter a new market
b. acquiring knowledge
c. broadening markets geographically
d. preventing industry consolidation
e. filling in needs in the corporate portfolio
preventing industry consolidation
1. Corporate raiders participate in _____.
a. related acquisitions
b. friendly acquisitions
c. hostile acquisitions
d. unrelated acquisitionsvertical acquisitions
1. The greatest benefits of the acquisition typically go to _____.
a. the managers of the acquiring firm
b. the shareholders of the acquiring firm
c. vertical acquisitions
d. unrelated acquisitions
e. investment bankers arranging the acquisition
the shareholders of the acquiring firm
1. The problems that can impact a merger or acquisition negatively include all of the following except _____.
a. increased interest costs
b. poison pills
c. high turnover among managers of the acquired firm
d. cultural similarities
e. increased risk
1. Activities that corporations can pursue to develop core capabilities and competencies include all of the following except _____.
b. attracting and retraining competent managers
c. improvement in R&D capabilities
d. effective tax management
e. better relations with special interest groups such as environmentalists
1. Retrenchment in a decline situation involves all of the following except _____.
a. work force reductions
b. closing unprofitable plants
c. outsourcing unprofitable activities
d. tighter cost control
e. increased advertising to increase sales
increased advertising to increase sales
1. Downscoping involves _____.
a. reducing the number of employees
b. cutting input expenses in a given unit
c. reducing the number of top managers in an organization
d. cutting output expenses (transportation of products) in a given unit
e. reducing the diversification of the firm by selling of units
reducing the diversification of the firm by selling of units
1. The term Chapter XI refers to _____.
a. the summary chapter of this text
b. the concept from the chapter of Porter’s book that refers to the overriding importance of strategy to firm success
c. a legal filing necessary for a merger or acquisition to be completed
d. a legal filing necessary for an IPO to occur
e. a legal filing that allows a firm to reorganize while it solves its financial problems
a legal filing that allows a firm to reorganize while it solves its financial problems
1. A successful bankruptcy filing requires all of the following characteristics except _____.
a. a realistic assessment of financial problems by management
b. the ability to move quickly so that court approval is not necessary
c. a willingness to incur the professional fees that are necessary for reorganization
d. the formulation of a plan that is acceptable to most creditors
e. a creditor group that is willing to negotiate
the ability to move quickly so that court approval is not necessary
1. LBO stands for _____.
a. leveraged buyout
b. leverage the budget
c. leave the best out
d. loss of budget options
e. lower budget options
1. A breakup restructuring strategy refers to _____.
a. breaking up the dominant logic of the organization so that new approaches are attempted
b. breaking up the mental models of the organization so that new approaches are attempted
c. focusing on the transaction cost economics so that large segments of those costs are reduced
d. breaking the organization structure into different units so that the strategic business units formed are more efficient
e. spinning off units into new public corporations
spinning off units into new public corporations
1. The Boston Consulting Group matrix is based on which two factors?
a. Business growth rate and relative market share
b. Business growth rate and industry attractiveness
c. Relative market share and competitive position
d. Industry attractiveness and competitive position
e. Cash cows and dogs
1. Business growth rate and relative market share
1. Stars in a BCG grid represent _____.
a. high business growth rates and low relative market share
b. high business growth rates and high relative market share
c. high relative market share and low business growth rate
d. low relative market share and low business growth rate
e. those units that should be sold
high business growth rates and high relative market share
1. Einstein Bros. Bagels secured a strong presence on the West Coast by acquiring Noah’s New York Bagels. The purchase of Finagle A. Bagel, a three-unit chain based in Boston gives it a foothold on the East Coast. What type of corporate strategy would you call this?
a. Horizontal integration
b. Vertical integration
c. Related diversification
d. Unrelated diversification
1. A fish and seafood restaurant buying a catfish farm is an example of:
a. Forward integration
b. Backward integration
c. Horizontal integration
d. Concentric diversification
e. Market development
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