MGMT 490 EXAM 2 QUESTIONS AND VERIFIED
ANSWERS
Which of the following is NOT a disadvantage of vertical integration? - Answers -
decreased product quality
All of the following factors make an alliance strategic, as opposed to just a convenient
business arrangement except - Answers - a strategic alliance enables greater
opportunities for employee advancement
Which of the following statements about blue-ocean strategies is NOT true? - Answers -
blue-ocean strategies are offensive strategies that involve a preemptive strike to secure
an advantageous position in a mature maker segment
Which of the following companies are the best targets for offensive-minded firms to
challenge? - Answers - market leaders that are vulnerable
Horizontal scope refers to the - Answers - range of product and service segments that a
firm services within its focal market.
Merger and acquisition strategies - Answers - are often driven by such strategic
objectives as to expand a company's geographic coverage or extend its business into
new product categories.
Building positions in selected stages of the industry value chain is referred to as a -
Answers - partial integration strategy
A late-mover advantage does NOT arise when - Answers - property rights protections in
the form of patents, copyrights, and trademarks prevent the ready imitation of initial
moves
Conditions that create first-mover advantages include all of the following EXCEPT -
Answers - the costs of pioneering are high relative to the benefits accrued.
Which of the following is NOT one of the big risks of outsourcing value chain activities
presently performed in-house? - Answers - A company may be less flexible in
accommodating shifting buyer preferences
Which of the following is NOT one of the additional strategic choices a company must
make once it has decided to employ a particular generic competitive strategy? -
Answers - whether to focus on providing services or products to a limited amount of
customers in a market niche
,Strategic offensives should be based on - Answers - those areas of strength where the
company has its greatest competitive advantage over targeted rivals.
Backward integration involves performing industry value chain activities - Answers -
previously performed by suppliers or other enterprises engaged in earlier stages of the
industry value chain
The most frequently used approach to defending a company's present position involves
actions - Answers - restricting a challenger's option for initiating a competitive attack
When is outsourcing NOT beneficial? - Answers - when internal control over a particular
activity is deemed essential
The mix of performing an activity internally as well as outsourcing in any given stage of
the vertical chain refers to which vertical integration strategy? - Answers - a tapered
integration strategy
The purpose of defensive strategies is to - Answers - lower the risk of being attacked, to
weaken the impact of any attack that occurs, and to influence challengers to aim their
efforts at other rivals.
The extent to which a firm engages in the various value chain activities, from initial
activities all the way to after-sales activities, is called - Answers - vertical scope.
A firm can pursue vertical integration by all of the following EXCEPT - Answers -
expanding its range of product and service segments within its product or service
market
All of the following are signals to would-be challengers that retaliation is likely EXCEPT -
Answers - creating collaborative relationships with other industry leaders to block new
entrants.
Which of the following is NOT an example of a competitively valuable strategic fit? -
Answers - restricting cross-business linkages among value chain activities
Diversifying into new businesses can be considered a success only if it - Answers -
builds shareholder value
Related diversification strategies are strong when built upon sharing - Answers -
competitively valuable resources.
Diversification into a new industry cannot be considered a success unless it results in -
Answers - enhanced shareholder value.
, To produce added long-term shareholder value, a move to diversify into a new business
must pass three tests the - Answers - better-off test, the cost-of-entry test, and the
industry attractiveness test
Which of the following makes acquisition an attractive approach to diversifying into
another industry? - Answers - It is quicker than trying to launch a brand-new operation,
offers an effective way to hurdle entry barriers, and allows the acquirer to move directly
to the task of building a strong position in the target industry.
Combination related-unrelated diversification strategies have particular appeal for
companies - Answers - having a mix of valuable competitive assets, covering the
spectrum from generalized to special resources and capabilities.
The drawbacks of an unrelated diversification strategy include - Answers - very
demanding managerial requirements and limited competitive advantage potential.
Which of the following best describes economies of scope? - Answers - Economies of
scope are cost reductions that flow from strategic fit along the value chains of related
businesses.
Relative market share as a measure of competitive strength is calculated by - Answers -
dividing the business's percentage share of total industry sales volume by the
percentage share held by its largest rival—it is a better indicator of a business's
competitive strength than is a simple percentage measure of market share
What is the benefit of calculating quantitative attractiveness ratings for the industries a
diversified company has invested in? - Answers - Calculating attractiveness ratings is a
systematic and reasonably reliable method for ranking a diversified company's
industries from most to least attractive.
A "cash hog" type of business - Answers - ?????? #12 chapter 8
A company that is already diversified may choose to broaden its business scope by
building positions in new related or unrelated businesses because of all of the following
EXCEPT - Answers - its top management wants to increase its compensation
Which of the following refers to cost reductions stemming from strategic fit along the
value chains of related businesses? - Answers - economies of scope
Corporate restructuring strategies - Answers - radically alter the business lineup by
divesting poor performers and acquiring new promising businesses.
Unrelated diversification requires that company managers spend much time and effort
screening acquisition candidates using all of the following criteria EXCEPT - Answers -
whether the business has a cross-business strategic fit.
ANSWERS
Which of the following is NOT a disadvantage of vertical integration? - Answers -
decreased product quality
All of the following factors make an alliance strategic, as opposed to just a convenient
business arrangement except - Answers - a strategic alliance enables greater
opportunities for employee advancement
Which of the following statements about blue-ocean strategies is NOT true? - Answers -
blue-ocean strategies are offensive strategies that involve a preemptive strike to secure
an advantageous position in a mature maker segment
Which of the following companies are the best targets for offensive-minded firms to
challenge? - Answers - market leaders that are vulnerable
Horizontal scope refers to the - Answers - range of product and service segments that a
firm services within its focal market.
Merger and acquisition strategies - Answers - are often driven by such strategic
objectives as to expand a company's geographic coverage or extend its business into
new product categories.
Building positions in selected stages of the industry value chain is referred to as a -
Answers - partial integration strategy
A late-mover advantage does NOT arise when - Answers - property rights protections in
the form of patents, copyrights, and trademarks prevent the ready imitation of initial
moves
Conditions that create first-mover advantages include all of the following EXCEPT -
Answers - the costs of pioneering are high relative to the benefits accrued.
Which of the following is NOT one of the big risks of outsourcing value chain activities
presently performed in-house? - Answers - A company may be less flexible in
accommodating shifting buyer preferences
Which of the following is NOT one of the additional strategic choices a company must
make once it has decided to employ a particular generic competitive strategy? -
Answers - whether to focus on providing services or products to a limited amount of
customers in a market niche
,Strategic offensives should be based on - Answers - those areas of strength where the
company has its greatest competitive advantage over targeted rivals.
Backward integration involves performing industry value chain activities - Answers -
previously performed by suppliers or other enterprises engaged in earlier stages of the
industry value chain
The most frequently used approach to defending a company's present position involves
actions - Answers - restricting a challenger's option for initiating a competitive attack
When is outsourcing NOT beneficial? - Answers - when internal control over a particular
activity is deemed essential
The mix of performing an activity internally as well as outsourcing in any given stage of
the vertical chain refers to which vertical integration strategy? - Answers - a tapered
integration strategy
The purpose of defensive strategies is to - Answers - lower the risk of being attacked, to
weaken the impact of any attack that occurs, and to influence challengers to aim their
efforts at other rivals.
The extent to which a firm engages in the various value chain activities, from initial
activities all the way to after-sales activities, is called - Answers - vertical scope.
A firm can pursue vertical integration by all of the following EXCEPT - Answers -
expanding its range of product and service segments within its product or service
market
All of the following are signals to would-be challengers that retaliation is likely EXCEPT -
Answers - creating collaborative relationships with other industry leaders to block new
entrants.
Which of the following is NOT an example of a competitively valuable strategic fit? -
Answers - restricting cross-business linkages among value chain activities
Diversifying into new businesses can be considered a success only if it - Answers -
builds shareholder value
Related diversification strategies are strong when built upon sharing - Answers -
competitively valuable resources.
Diversification into a new industry cannot be considered a success unless it results in -
Answers - enhanced shareholder value.
, To produce added long-term shareholder value, a move to diversify into a new business
must pass three tests the - Answers - better-off test, the cost-of-entry test, and the
industry attractiveness test
Which of the following makes acquisition an attractive approach to diversifying into
another industry? - Answers - It is quicker than trying to launch a brand-new operation,
offers an effective way to hurdle entry barriers, and allows the acquirer to move directly
to the task of building a strong position in the target industry.
Combination related-unrelated diversification strategies have particular appeal for
companies - Answers - having a mix of valuable competitive assets, covering the
spectrum from generalized to special resources and capabilities.
The drawbacks of an unrelated diversification strategy include - Answers - very
demanding managerial requirements and limited competitive advantage potential.
Which of the following best describes economies of scope? - Answers - Economies of
scope are cost reductions that flow from strategic fit along the value chains of related
businesses.
Relative market share as a measure of competitive strength is calculated by - Answers -
dividing the business's percentage share of total industry sales volume by the
percentage share held by its largest rival—it is a better indicator of a business's
competitive strength than is a simple percentage measure of market share
What is the benefit of calculating quantitative attractiveness ratings for the industries a
diversified company has invested in? - Answers - Calculating attractiveness ratings is a
systematic and reasonably reliable method for ranking a diversified company's
industries from most to least attractive.
A "cash hog" type of business - Answers - ?????? #12 chapter 8
A company that is already diversified may choose to broaden its business scope by
building positions in new related or unrelated businesses because of all of the following
EXCEPT - Answers - its top management wants to increase its compensation
Which of the following refers to cost reductions stemming from strategic fit along the
value chains of related businesses? - Answers - economies of scope
Corporate restructuring strategies - Answers - radically alter the business lineup by
divesting poor performers and acquiring new promising businesses.
Unrelated diversification requires that company managers spend much time and effort
screening acquisition candidates using all of the following criteria EXCEPT - Answers -
whether the business has a cross-business strategic fit.
