Chapter 007- Strategic Management and Business Policy: Globalization, Innovation and Sustainablility 14 edition Test bank PDF

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Chapter007- Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio. *A) TrueB) False Chapter007- Corporate parenting is the coordination of cash flow among units. A) True*B) False Chapter007- The most widely pur...

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1. Chapter007-01 Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio. *A) True B) False

2. Chapter007-02 Corporate parenting is the coordination of cash flow among units. A) True *B) False

3. Chapter007-03 The most widely pursued corporate directional strategies are those designed to achieve growth. *A) True B) False

4. Chapter007-04 A merger is a transaction involving two or more corporations in which stock is exchanged, but from which only one corporation survives. *A) True B) False

5. Chapter007-05 The two basic growth strategies are concentration and strategic alliances. A) True *B) False

6. Chapter007-06 Vertical integration is going backward on an industry's value chain. A) True *B) False

7. Chapter007-07 Vertical 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) True B) False

8. Chapter007-08 Backward integration is often more profitable than forward integration.

*A) True B) False

9. Chapter007-09 BP and Royal Dutch Shell are examples of fully integrated firms because they internally make 100% of their key supplies and completely control their distributors. *A) True B) False

10. Chapter007-10 With taper integration, a firm internally makes 100% of its key supplies and completely controls its distributors. A) True *B) False

11. Chapter007-11 An example of forward quasi-integration would be a large pharmaceutical firm that acquires part interest in a drugstore chain in order to guarantee that its drugs have access to the distribution channel. *A) True B) False

12. Chapter007-12 A long-term contract is considered vertical integration. A) True *B) False

13. Chapter007-13 Horizontal growth can be achieved by expanding the firm's products into other geographic locations and/or by increasing the range of products and services offered to current markets. *A) True B) False

14. Chapter007-14 Exporting grants rights to another company to open a retail store using the franchiser's name and operating system. A) True *B) False

15. Chapter007-15 Forming a joint venture between a foreign corporation and a domestic company is the most popular strategy used to enter a new country. *A) True B) False

16. Chapter007-16 A relatively quick way to move into an international area is through greenfield development. A) True *B) False

17. Chapter007-17 Turnkey operations are typically contracts for the construction of operating facilities in exchange for a fee. *A) True B) False

18. Chapter007-18 Management contracts are common when a host government expropriates part or all of a foreignowned company's holdings in its country. *A) True B) False

19. Chapter007-19 Synergy is the concept that two businesses operating within a company will generate more profits together than they could separately by common use of technology, customers, distribution, managerial skills, or product similarity. *A) True B) False

20. Chapter007-20 Concentric diversification is growth into unrelated businesses. A) True *B) False

21. Chapter007-21 Conglomerate diversification is diversifying into an industry unrelated to its current one. *A) True B) False

22. Chapter007-22 If a new business is very similar to that of the acquiring firm, it adds little new to the corporation and only marginally improves performance. *A) True B) False

23. Chapter007-23 The stability strategies are really a lack of any strategy. A) True *B) False

24. Chapter007-24 Stability strategies can be very useful in the short run, but they can be dangerous if followed for too long. *A) True B) False

25. Chapter007-25 When Sony's CEO, Howard Stringer, eliminated 10,000 jobs and closed 11 plants, he was addressing the contraction phase of the turnaround strategy. *A) True B) False

26. Chapter007-26 According to the BCG Growth Share Matrix, cash cows are market share leaders typically at the growth stage of their product life cycle and are usually able to generate enough cash to maintain their high share of the market. A) True *B) False

27. Chapter007-27 According to the BCG Growth Share Matrix, dogs should be either sold off or managed carefully for the small amounts of cash they can generate. *A) True B) False

28. Chapter007-28 The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position. *A) True B) False

29. Chapter007-29 A limitation of the BCG Growth Share Matrix is the questionable link between market share and profitability. *A) True B) False

30. Chapter007-30 One limitation of portfolio analysis is that it provides an illusion of scientific rigor. *A) True B) False

31. Chapter007-31 Corporate parenting views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units. *A) True B) False

32. Chapter007-32 In multipoint competition, large multi-business corporations compete against other large multibusiness firms in a number of markets. *A) True B) False

33. Chapter007-33 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

34. Chapter007-34 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

35. Chapter007-35 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

36. Chapter007-36 Which one of the following directional strategies is most frequently used in corporations? A) stability B) consolidation *C) growth D) retrenchment E) expansion

37. Chapter007-37 Which external growth strategy involves two or more corporations joining in a stock exchange and from which only one corporation survives? *A) mergers B) strategic alliances C) diversification D) acquisitions E) concentration

38. Chapter007-38 Which of the following strategies was being used when Allied Corporation and Signal Companies formed Allied Signal? *A) mergers B) strategic alliances C) diversification D) acquisitions E) concentration

39. Chapter007-39 Which external growth strategy was demonstrated when Procter & Gamble completely absorbed Gillette? A) mergers B) strategic alliances C) diversification D) concentration *E) acquisitions

40. Chapter007-40 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.

41. Chapter007-41 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.

42. Chapter007-42 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.

43. Chapter007-43 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.

44. Chapter007-44 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.

45. Chapter007-45 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.

46. Chapter007-46 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.

47. Chapter007-47 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.

48. Chapter007-48 In many cases, ________ integration is more profitable than ________ integration. A) forward; backward B) vertical; backward C) backward; vertical *D) backward; forward E) mass; forward

49. Chapter007-49 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.

50. Chapter007-50 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

51. Chapter007-51 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.

52. Chapter007-52 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

53. Chapter007-53 As defined by the text, synergy is the concept A) that involves adding different products or divisions to the corporation. B) that supports divestiture of one corporation by another. *C) that two firms can generate more profits together than separately. D) that a corporation can enter one or more businesses that are necessary to manufacture its own product. E) that two functional areas of a corporation can coordinate their work as a team.

54. Chapter007-54 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.

55. Chapter007-55 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.

56. Chapter007-56 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

57. Chapter007-57 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.

58. Chapter007-58 An MNC uses which international strategy for entering a foreign market by simply shipping goods produced in the company's home country to other countries for marketing to minimize risk and to experiment with a specific product? A) licensing B) joint ventures *C) exporting D) production sharing E) acquisitions

59. Chapter007-59 An MNC uses which international strategy for entering a foreign market by associating itself with a firm in the host country or a government agency in that country to combine resources and expertise needed for the development of a new product or technologies? A) licensing *B) joint ventures

C) production sharing D) exporting E) acquisitions

60. Chapter007-60 One benefit of a U.S. company entering a joint venture with an international firm is that it *A) reduces the risks of expropriation by host country officials. B) enhances the policy of the host country's takeover of the firm. C) promotes skepticism among other countries not involved in the merger. D) encourages competitors to work with the company. E) increases revenues by 20%.

61. Chapter007-61 An MNC uses which international strategy for entering a foreign market by purchasing another company already operating in the area developing synergistic benefits gained from acquiring strong complementary product lines and a good distribution network? A) licensing B) joint ventures C) production sharing D) exporting *E) acquisitions

62. Chapter007-62 In international dealings, greenfield development is A) a way in which an MNC may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the MNC. B) a way in which an MNC can take total control of operations by acquiring a firm already established in the host country. *C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire its workforce. D) when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. E) contracting for construction of operating facilities in exchange for a fee.

63. Chapter007-63 An MNC uses which international strategy for entering a foreign market by combining the higher labor skills and technology available in the developed countries with the lower cost labor available in the developing countries? A) licensing B) joint ventures *C) production sharing D) exporting E) acquisitions

64. Chapter007-64 In international dealings, turnkey operations are A) a way in which an MNC may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the MNC. B) a way in which an MNC can take total control of operations by either starting a business from scratch or acquiring a firm already established in the host country. C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire a workforce. D) when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. *E) contracting for construction of operating facilities in exchange for a fee.

65. Chapter007-65 Management contracts are used in international dealings A) as a way in which an MNC may contract with a foreign government or local firm to trade raw materials for certain resources belonging to the MNC. B) as a way in which an MNC can take total control of operations by either starting a business from scratch or acquiring a firm already established in the host country. C) when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire a workforce. *D) when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specified fee and period of time. E) when an MNC typically contracts for construction of operating facilities in exchange for a fee.

66. Chapter007-66 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.

67. Chapter007-67 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.

68. Chapter007-68 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.

69. Chapter007-69 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

70. Chapter007-70 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

71. Chapter007-71 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 E) involves adding different products or divisions to the corporation

72. Chapter007-72 The strategy which takes place in two basic phases of contraction and consolidation is A) merger. B) liquidation. C) integration. D) divestment. *E) turnaround.