Functional Strategy and Strategic Choice - Strategic Management Q&A PDF

Preview

Summary

Strategic management is one of the subjects in Accounting and Business Management. This particular document is compilation of questions and answers about the topic, Functional Strategy and Strategic Choice....

Description

STRATEGIC MANAGEMENT QUIZZER Strategy Formulation: Functional Strategy and Strategic Choice 1) The orientation of the functional strategy is dictated by its parent business unit's strategy. Answer: TRUE 2) Each business unit has its own set of departments, each with its own functional strategy. Answer: TRUE 3) A product development strategy deals with pricing, selling, and distributing a product. Answer: FALSE 4) Using a market development strategy, a company can capture a larger share of an existing market for current products or develop new markets for current products. Answer: TRUE 5) When ColgatePalmolive and Unilever take a successful product that they marketed in one part of the world and market it elsewhere, they are following a market development strategy. Answer: TRUE 6) Church & Dwight uses the line extension strategy when they put the Arm & Hammer name on various new food products. Answer: TRUE 7) When the Kellogg Company changed to a push strategy, they spent more money on consumer advertising designed to build brand awareness so that shoppers will ask for the products. Answer: FALSE 8) Penetration pricing attempts to hasten market development and offers the pioneer the opportunity to use the experience curve to gain market share with a low price and dominate the industry. Strategic Management and Business Policy, 14e (Wheelen)

Answer: TRUE 9) The use of the Internet to market goods directly to the customer allows a company to use dynamic pricing. Answer: TRUE 10) A financial strategy examines the financial implications of corporate and business level strategic options and identifies the best financial course of action. Answer: TRUE 11) Equity financing is preferred for unrelated diversification while debt financing is preferred for related diversification. Answer: FALSE 12) In a leveraged buyout, the acquired company, in effect, pays for its own acquisition. Answer: TRUE 13) An example of the use of the leader R&D functional strategy to achieve a differentiation competitive advantage is Nike Inc. Answer: TRUE 14) An operations strategy determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers. Answer: TRUE 15) The continuous improvement system was developed by Deming. Answer: TRUE 16) The automobile industry is currently experimenting with the strategy of mass customization in which preassembled subassemblies are delivered as they are needed to a company's assembly line workers. Answer: FALSE

Strategic Management and Business Policy, 14e (Wheelen)

17) The importance of sole sourcing was supported by Deming to obtain high supplier quality. Answer: TRUE 18) Two suppliers are the sole suppliers of two different parts, but they are also backup suppliers for each other's parts in parallel sourcing. Answer: TRUE 19) Logistics strategy deals with the flow of products into and out of the manufacturing process. Answer: TRUE 20) Research indicates that the use of work teams leads to decreased quality and productivity as well as lower employee satisfaction and commitment as a result of less accountability. Answer: FALSE 21) The followthemoon management philosophy allows project team members living in one country to pass their work to team members in another country in which the workday is just beginning. Answer: FALSE 22) Outsourcing is the alternative to vertical integration. Answer: TRUE 23) The key to outsourcing is to purchase from outside only those activities that are not key to the company's distinctive competencies. Answer: TRUE 24) Fujitsu demonstrated a strategy to avoid when it imitated IBM's strategy focused on mainframes in 1990. Answer: TRUE 25) Corporate scenarios are pro forma balance sheets and income statements that forecast the effect each alternative strategy and its various programs will likely have on division and corporate return on investment. Strategic Management and Business Policy, 14e (Wheelen)

Answer: TRUE 26) Risk in strategic management is only the probability that the strategy will be effective. Answer: FALSE 27) The realoptions approach is used by Chevron for bidding on petroleum reserves. Answer: TRUE 28) The attractiveness of a strategic alternative is affected by its perceived compatibility with the key stakeholders in a corporation's task environment. Answer: TRUE 29) A strategy's compatibility with the corporate culture has little likelihood of impacting its success. Answer: FALSE 30) the most attractive strategic alternative might not be selected if it is contrary to the needs and desires of important top managers. Answer: TRUE 31) Some executives show a selfserving tendency to attribute the firm's problems not to their own poor decisions, but to environmental events out of their control such as government policies or a poor economic climate. Answer: TRUE 32) There is mounting evidence that when an organization is facing a dynamic environment, the best strategic decisions are arrived at through consensus when everyone agrees on one alternative. Answer: FALSE 33) "The customer is always right" is an example of a policy in Nordstrom's. Answer: TRUE

34) Which strategy is developed to pull together the various activities and competencies of each Reference: Strategic Management and Business Policy, 14e (Wheelen)

department so that corporate and business unit performance improves and resource productivity is maximized? A) business strategy B) competitive strategy C) generic strategy D) functional strategy 35) The pricing, selling, and distributing of a product is referred to as a(n) strategy. A) functional B) marketing C) operations D) financial

36) The type of marketing strategy in which a company captures a larger share of an existing market for current products through market saturation or market penetration or develops new markets for current products is called A) market development. B) push strategy. C) product development. D) pull strategy.

37) When Smith & Wesson puts its name on others' products like men's cologne, it is using which marketing strategy? A) demand pricing B) brand pricing C) brand extension D) penetration extension Reference: Strategic Management and Business Policy, 14e (Wheelen)

38) A company may use which of the following trade promotions to "pull" their products through the distribution system? A) discounts B) instore special offers C) advertising allowances D) consumer advertising

39) When a company spends a large amount of money on trade promotion in order to gain or hold shelf space in retail outlets, a company is using a strategy. A) pull B) push C) financial D) dedicated line 40) Which type of pricing takes advantage of the demand curve while the product is still novel and competitors are few to increase profits? 1. A) demand pricing 2. B) skim pricing 3. C) competitive pricing 4. D) penetration pricing 41) Which type of pricing attempts to hasten market development and offers the pioneer the opportunity to utilize the experience curve to gain market share with a low price and dominate the industry? A) demand pricing B) competitive pricing C) skim pricing D) penetration pricing Reference: Strategic Management and Business Policy, 14e (Wheelen)

42) Which of the following is NOT a goal of financial strategies? A) Examine the financial implication of corporate and business level strategic options and identify the best financial course of action. B) Provide the corporation with the appropriate financial structure and funds to achieve its overall objectives. C) Institute a new product development plan to generate profit gain market share. D) Provide competitive advantage through a lower cost of funds and a flexible ability to raise capital to support a business strategy. 43) All of the following are benefits for a company to raising its debt levels EXCEPT A) deterrent to takeover by other firms. B) improvement in productivity. C) improvement in cash flows. D) improvement in strategic options. 44) A popular financial strategy in which a company is acquired in a transaction financed largely by debt and eventually paid with money generated from the acquired company's operations or by sale of its assets is A) illegal in most countries. B) a good way to build a core competency. C) an application of the capital asset pricing model. D) the leveraged buyout. 45) Leveraged buyouts are also sometimes referred to as 1. A) leveraged bargains. 2. B) management buyouts. 3. C) management bargains. 4. D) coordinated buyouts. 46) When a company exchanges 200 shares of stock worth $20 each for 100 shares worth Reference: Strategic Management and Business Policy, 14e (Wheelen)

$40 each, they are using A) tracking stock. B) holding stock. C) an LBO. D) reverse stock split. 47) a(n)

The strategy that deals with product and process innovation and improvement is known as strategy.

1. A) marketing 2. B) R&D 3. C) operations 4. D) financial

48) A company which pioneers an innovation is called a 1. A) technological follower. 2. B) technological opportunist. 3. C) technological leader. 4. D) technological manufacturer.

49) A company which imitates the products of competitors is referred to as a 1. A) technological follower. 2. B) technological opportunist. 3. C) technological leader. 4. D) technological manufacturer. 50) When Intel opened four smallscale research facilities adjacent to universities to promote the crosspollination of ideas, they were using which approach to R&D? Reference: Strategic Management and Business Policy, 14e (Wheelen)

1. A) open innovation 2. B) differentiation 3. C) technology scouts 4. D) continuous improvement STRATEGIC MANAGEMENT QUIZZER Strategy Formulation: Functional Strategy and Strategic Choice

51) According to Porter, to achieve a cost advantage by following the functional strategy of technological followership, a business unit should A) pioneer the lowestcost product design. B) innovate in other activities to increase buyer value. C) avoid R&D costs through imitation. D) create lowcost ways of performing value activities.

52) According to Porter, to achieve a differentiation competitive strategy by following the functional strategy of technological leadership, a business unit should A) pioneer the lowestcost product design. B) innovate in other activities to increase buyer value. C) avoid R&D costs through imitation. D) create lowcost ways of performing value activities.

53) If a company wishes to be a technological leader and also maintain a cost advantage, the appropriate R&D strategy would be to 1. A) increase the cost of the product. 2. B) lower the cost of the product or value activities by learning from the leader's experience. 3. C) avoid R&D costs through imitation. Reference: Strategic Management and Business Policy, 14e (Wheelen)

4. D) create lowcost ways of performing value activities. 54) If a company wishes to be a technological follower and also pursue a differentiation strategy, the appropriate R&D strategy would be to A) adapt the product or delivery system more closely to buyer needs by learning from the leader's experience. B) value activities by learning from the leader's experience. C) avoid R&D costs through imitation. D) create lowcost ways of performing value activities.

55) When a company determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers, the company is developing its strategy. A) marketing B) operations C) R&D D) financial

56) A flexible manufacturing system is A) oneofakind production using skilled labor. B) highly automated assembly lines making one massproduced product using little human labor. C) a grouping of parts into manufacturing families to produce a wide variety of massproduced items. D) a process utilizing the justintime (JIT) method of manufacturing.

57) When components are standardized and each machine functions like a job shop but is positioned in the same order as the parts are processed, this setup is known as

Reference: Strategic Management and Business Policy, 14e (Wheelen)

A) mass customization. B) connected line batch flow. C) connected job flow.

Reference: Strategic Management and Business Policy, 14e (Wheelen)

D) mass batch flow. 58) When there are highly automated assembly lines making one massproduced product using little human labor, this setup is called A) dedicated transfer lines. B) connected line batch flow. C) connected job flow. D) mass batch lines.

59) As it relates to operations, AMT stands for A) Automated Manufacturing Technology. B) Advanced Manufacturing Technology. C) Asymptotic Manufacturing Technology. D) Advanced Monotone Technology.

60) Continuous improvement is an operations concept developed by Deming and perfected by firms in A) the United States. B) Sweden. C) Japan. D) Germany.

61) When Dell Computer's customers use the Internet to design their own computers, this demonstrates which manufacturing strategy? A) continuous improvement B) mass production C) job shop Reference: Strategic Management and Business Policy, 14e (Wheelen)

D) mass customization 62) When a company deals with obtaining raw materials, parts, and supplies needed to perform the operations function, the company is developing its strategy. A) operations B) purchasing C) R&D D) financial

63) The purchasing strategy used by an automobile manufacturer when it orders seats for a specific car model from several vendors is A) sole sourcing. B) multiple sourcing. C) justintime sourcing. D) backup sourcing.

64) The concept of was taken one step further in JITII, in which vendor sales representatives usually have desks next to the purchasing company's factory floor, attend production status meetings, visit the R&D lab, and analyze the purchasing company's sales forecasts. A) multiple sourcing B) outsourcing C) sole sourcing D) parallel sourcing 65) The purchasing strategy in which two suppliers are the sole suppliers of different parts, but are also the backup suppliers for each other's parts is A) sole sourcing. B) multiple sourcing. Reference: Strategic Management and Business Policy, 14e (Wheelen)

C) justintime sourcing. D) parallel sourcing. 66) Three trends are evident in logistics: outsourcing, the use of the Internet, and 1. A) centralization. 2. B) downsizing. 3. C) logistical partnerships. 4. D) computerization. 67) The flow of products into and out of the manufacturing process is a factor when developing a(n) strategy. A) marketing B) logistics C) operations D) financial 68) Many companies have found that outsourcing logistics A) helps centralize logistics. B) reduces costs and improves delivery time. C) is an effective businesslevel strategy. D) helps the companies differentiate themselves.

69) Avon is an example of a company that demonstrated having a diverse workforce A) can be a competitive advantage. B) can lower productivity. C) can be an effective IT strategy. D) can hinder quality. Reference: Strategic Management and Business Policy, 14e (Wheelen)

70) A recent trend in information systems strategy used by multinational corporations is A) computerizing accounting. B) automating customer service. C) practicing followthesun management. D) replacing Fortran with Cobol in order to boost productivity.

71) Purchasing a product or service from an outside contractor that had been previously provided internally is called A) vertical integration. B) horizontal integration. C) transaction costing. D) outsourcing. 72) A study of 30 firms revealed that outsourcing can lead to a reduction in costs.

percent

A) 3 B) 9 C) 20 D) 30

73) According to a 2012 survey by Deloitte Consulting, the most popular outsourced activity was A) marketing. B) sales. C) finance.

Reference: Strategic Management and Business Policy, 14e (Wheelen)

D) information technology. 74) Which of the following is NOT one of the major outsourcing errors that should be avoided? A) failure to keep core activities inhouse B) selecting the wrong vendor C) writing a poor contract D) micromanaging the outsourced activity to maintain control

75) The key to outsourcing is to purchase from the outside only those activities that A) are not key to the company's distinctive competence. B) are very expensive. C) provide the company competitive advantage. D) are provided by an important supplier. 76) A company which has previously found great success pioneering an extremely successful product that is presently trying to turn another "longshot" into a success would be an example of which strategy to avoid? A) follow the leader B) hit another home run C) arms race D) do everything

77) A company which keeps up by imitating a leading company's strategy while ignoring its own strengths and weaknesses is an example of which strategy to avoid? A) follow the leader B) hit another home run C) arms race Reference: Strategic Management and Business Policy, 14e (Wheelen)

D) do everything 78) Since the deregulation of the airline industry, major airlines have entered into a spirited battle for market share by cutting prices and offering special deals. This is an example of which strategy to avoid? A) follow the leader B) hit another home run C) arms race D) do everything 79) A company which has invested so heavily in a particular strategy that it will not consider a change in this strategy even if it is not successful, would be an example of which strategy to avoid? A) follow the leader B) hit another home run C) arms race D) losing hand

80) When considering acceptable alternative strategies, the most important criterion is the capability of the proposed strategy to deal with A) the prospects of ensuring profitable return on investment. B) the specific strategic factors developed in the SWOT analysis. C) defining the competitive environment in which the firm is competing. D) the future longterm prospects of the industry.

Reference: Strategic Management and Business Policy, 14e (Wheelen)

81) The technique used to help strategic managers choose among alternative choices by defining the task environment, developing a set of various forecasts, and using pro forma financial statements is called A) decision trees. B) SWOT analysis. C) industry scenarios. D) corporate scenarios. 82) The first step in constructing a corporate scenario is to A) develop a commonsized financial statement. B) construct detailed pro forma financial statements. C) decide upon how much risk management is willing to accept. D) use industry scenarios to develop a set of assumptions about the task environment.

83) Which one of the following is NOT true of risk? A) It includes the length of time the asset will be unavailable for other uses. B) It includes the probability that the strategy will be effective. C) Managers who own a significant amount of stock in their firms are less likely to engage in risktaking actions. D) It includes the amount of assets the corporation must allocate to that strategy. 84) According to the text, which one of the following is NOT one of the reasons why innovations seem to occur more often in small firms rather than in large, established corporations? A) An entrepreneur in a small firm is more willing to accept greater risk than would a larger firm of diversified ownership. B) Small firms are completely ignorant of risk management. C) The greater the assets involved and the longer they are tied up, the more likely top Reference: Strategic Management and Business Policy, 14e (Wheelen)

management in large firms is to demand a high probability of success. D) Companies operating in global industries must deal with a greater amount of risk than firms operating only in one country. 85) A new approac...