MGT 4335 CH 7 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE

MGT 4335 CH 7 EXAM QUESTIONS ANSWERED CORRECTLY LATEST UPDATE 1) 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 - Answers A) corporate 2) 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 - Answers B) directional strategy 3) Which kind of corporate strategy deals with the manner in which the firm coordinates activities and builds corporate synergies through resource sharing and development? A) portfolio strategy B) directional strategy C) parenting strategy D) cooperative strategy E) functional strategy - Answers C) parenting strategy 4) Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio. - Answers Answer: TRUE 5) Corporate parenting is the coordination of cash flow among units. - Answers Answer: FALSE 6) Vertical integration is going backward on an industry's value chain. - Answers Answer: FALSE 7) What are the three key issues that corporate strategy addresses? - Answers 1. The firm's overall orientation toward growth, stability, and retrenchment (directional strategy). 2. The industries or markets in which the firm competes through its products and business units (portfolio analysis). 3. The manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units (parenting strategy). 8) Which one of the following directional strategies is most frequently used in corporations? A) stability B) consolidation C) growth D) retrenchment E) expansion - Answers C) growth 9) Which external growth strategy involves two or more corporations joining in a stock exchange and from which only one corporation survives? A) merger B) strategic alliance C) diversification D) acquisition E) concentration - Answers A) merger 10) Which of the following strategies was being used when Allied Corporation and Signal Companies formed Allied Signal? A) merger B) strategic alliance C) diversification D) acquisition E) concentration - Answers A) merger 11) Which external growth strategy was demonstrated when Procter & Gamble completely absorbed Gillette? A) merger B) strategic alliance C) diversification D) concentration E) acquisition - Answers E) acquisition 12) Which of the following is not a reason why the growth strategy is so desirable? A) There are more opportunities for advancement and promotion. B) A corporation that experiences successful growth is thought of positively by the marketplace and potential investors. C) A large and growth-oriented corporation has more clout and influence. D) A growing firm can cover up mistakes and inefficiencies because of the increase in cash flow revenue. E) A large and growing firm attracts more acquisition offers. - Answers E) A large and growing firm attracts more acquisition offers. 13) The most logical growth strategy for a corporation with current product lines with real growth potential in a growing industry is A) concentration. B) conglomerate integration. C) concentric diversification. D) stability. E) retrenchment. - Answers Answer: A 14) 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) vertical growth. B) tapered integration. C) horizontal integration. D) external vertical integration. E) quasi-integration. - Answers A) vertical growth. 15) The purpose of vertical growth is to A) take over a function previously supplied by a former employer. B) take over a function previously provided by a supplier or by a distributor. C) acquire a company of similar objective. D) sell a company encumbered with debt. E) expand to countries with strong trade alliances. - Answers B) take over a function previously provided by a supplier or by a distributor. 16) The purchase of the supplier Carroll's Foods for its hog-growing facilities by Smithfield Foods, the world's largest pork processor, is an example of A) forward integration. B) horizontal integration. C) backward integration. D) transferred integration. E) mass integration. - Answers C) backward integration. 17) The ability for Nike to manufacture its own shoes and then build stores for distribution is an example of A) forward integration. B) horizontal integration. C) backward integration. D) transferred integration. E) mass integration. - Answers A) forward integration. 18) A disadvantage of vertical integration is that it A) creates exit barriers. B) improves coordination of activities. C) decreases demand for the firm's products and services. D) creates entry barriers. E) avoids time consuming tasks. - Answers A) creates exit barriers. 19) An attempt to explain that vertical integration is more efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market becomes too great has been proposed by A) population theory. B) institution theory. C) freakonomics. D) transaction cost economics. E) transaction growth theory. - Answers D) transaction cost economics. 20) In many cases, ________ integration is more profitable than ________ integration. A) forward; backward B) vertical; backward C) backward; vertical D) backward; forward E) mass; forward - Answers Answer: D 21) When a firm internally makes 100% of its key supplies and completely controls its distributors, this is known as A) full integration. B) taper integration. C) mass integration. D) economical integration. E) strategic integration. - Answers A) full integration. 22) When Bristol-Myers Squibb purchased 17% of ImClone's common stock to gain access to a new drug, it was using which type of integration? A) full integration B) long-term contracts C) backwards integration D) taper integration E) quasi integration - Answers E) quasi integration 23) A firm's expansion into other geographic locations and/or increasing the range of products and services offered to current markets is called A) forward vertical growth. B) diversification. C) backward vertical growth. D) captive company strategy. E) horizontal growth. - Answers E) horizontal growth. 24) Which strategy did Delta choose when it acquired Northwest Airlines to obtain access to Northwest's Asian markets? A) a retrenchment strategy using horizontal integration through internal means B) a horizontal integration strategy C) a stability strategy using concentric diversification D) a growth strategy using vertical integration through external means E) a retrenchment strategy using a concentration method - Answers B) a horizontal integration strategy 25) When Coca Cola contracted with Capgemini to provide accounting and financial services, which strategy was Coca Cola using? A) horizontal growth B) backward integration C) outsourcing D) retrenchment E) diversification - Answers C) outsourcing 26) Adding a related or complementary product to a corporation's business units is called A) concentration. B) horizontal growth. C) concentric diversification. D) vertical growth. E) conglomerate diversification. - Answers Answer: C 27) Growth through diversification out of an industry into an unrelated industry is called A) concentration. B) horizontal growth. C) concentric diversification. D) vertical growth. E) conglomerate diversification. - Answers E) conglomerate diversification. 28) Which strategy might be the most likely when management realizes that the current industry is unattractive and that the firm lacks outstanding skills that it could easily transfer to related products or services in other industries? A) concentration B) horizontal growth C) concentric diversification D) vertical growth E) conglomerate diversification - Answers E) conglomerate diversification 29) With conglomerate diversification, the focus is on A) product-market synergy. B) sound investment and value-oriented management. C) employee satisfaction. D) similar product offerings. E) market demand. - Answers B) sound investment and value-oriented management. 30) An international study by Bain & Company concluded that the likelihood of a successful acquisition is increased with A) previous experience between an acquirer and a target firm. B) narrowing the number of candidates for acquisition. C) foregoing the time for due diligence. D) limited geographical expansion. E) the addition of capacity levels. - Answers A) previous experience between an acquirer and a target firm. 31) Studies reveal that over one-half to two-thirds of acquisitions are failures primarily because A) the premiums paid were too high for the firm to earn their cost of capital. B) due diligence was not conducted. C) the premiums were too high to finance and resulted in bankruptcy. D) there were unresolved management conflicts. E) there was a clash of management philosophies. - Answers A) the premiums paid were too high for the firm to earn their cost of capital. 32) Which family of corporate strategies is often viewed as a lack of strategy? A) stability strategies B) cooperative strategies C) growth strategies D) retrenchment strategies E) competitive strategies - Answers A) stability strategies 33) Which strategy is considered a timeout? A) pause/proceed-with-caution B) concentration C) contraction D) rebirth E) captive company - Answers A) pause/proceed-with-caution 34) Which strategy is an attempt to artificially support profits when a company's sales are declining by reducing investment and short-term discretionary expenditures? A) profit strategy B) no-change strategy C) turnaround strategy D) concentration strategy E) captive company strategy - Answers A) profit strategy 35) In which phase of a turnaround strategy does the firm attempt to "stop the bleeding" with a general, across-the-board cutback in size and costs? A) contraction B) consolidation C) captive company D) rebirth E) divestment - Answers A) contraction 36) When P&G sold off half of its brands and consolidated others, it was following which retrenchment strategy? A) divestment B) sell-out C) contraction D) captive company E) liquidation - Answers A) divestment 37) ________ seeks to perpetuate a firm while ________ terminates the firm. A) Bankruptcy; liquidation B) Captive company; bankruptcy C) Bankruptcy; contraction D) Rebirth; bankruptcy E) Liquidation; sell off - Answers A) Bankruptcy; liquidation 38) Research comparing concentric with conglomerate diversification concludes that A) conglomerate diversification is always less profitable than concentric diversification. B) concentric diversification is always less profitable than conglomerate diversification. C) the relationship between relatedness and performance follows an inverted U-shaped curve. D) neither concentric nor conglomerate diversification are ever profitable. E) for optimum effectiveness both conglomerate and concentric diversification should be utilized in tandem. - Answers C) the relationship between relatedness and performance follows an inverted U-shaped curve. 39) The controversy surrounding external versus internal growth finds A) external growth appears to be superior financially to internal growth. B) internal growth appears to be superior financially to external growth. C) there appears to be no financial advantage to either. D) acquisitions have a lower survival rate than new internally generated business ventures. E) strategic alliances are superior to both. - Answers B) internal growth appears to be superior financially to external growth. 40) The stability strategy is appropriate for all of the following circumstances EXCEPT A) useful in the short-run but can be dangerous if followed too long. B) most appropriate for reasonably successful corporations in a reasonably predictable environment. C) when a firm is continuing its current activities without a significant change in direction. D) appropriate when the industry is in decline. E) popular with small business owners who have found a niche and are happy with their success. - Answers D) appropriate when the industry is in decline. 41) 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? A) horizontal integration strategy B) no change strategy C) retrenchment strategy D) pause/proceed with caution strategy E) profit strategy - Answers D) pause/proceed with caution strategy 42) 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) horizontal integration strategy B) no change strategy C) retrenchment strategy D) pause/proceed with caution strategy E) profit strategy - Answers B) no change strategy 43) Which of the following describes a turnaround strategy? A) a form of divestment and is appropriate when corporate problems can be traced to the poor performance of an SBU or product line B) occurs when the corporation reduces the scope of some of its functional activities and becomes "captive" to another firm C) emphasizes improving operational efficiency and is appropriate when a corporation's problems are pervasive, but not yet critical D) occurs when a corporation liquidates all its assets