Top of Form
1.
value:
2.00 points
Which of the following
statements about corporate diversification is incorrect?
Creating added value for
shareholders via diversification requires building a multibusiness company
where the whole is greater than the sum of its parts.
Shareholder value is not created
by diversification unless it passes the “better off” or “1 + 1 =
3 test.”
The
more attractive an industry’s prospects are for growth and good long-term
profitability, the less expensive it can be to enter.
Diversification moves that
satisfy all three diversification tests have the greatest potential to grow
shareholder value over the long term.
Diversification cannot be
considered a success unless it results in added shareholder value—value that
shareholders cannot capture for themselves by spreading their investments
across the stocks of companies in different industries.
2.
value:
2.00
points
Striving
to be socially responsible entails touching such bases as
what actions to take to enhance workforce diversity and
make the company a great place to work.
exerting conscious efforts to ensure that all elements of
the company’s strategy are ethical and actions to make the company a great
place to work.
All of these choices
are correct.
what, if any, actions to take to protect or enhance the
environment (beyond what is legally required).
whether to make charitable contributions and donate money
and the time of company personnel to community service endeavors.
Bottom
of Form
3.
value:
2.00
points
Putting
together a capable top management team
is important in building an organization capable of
proficient strategy execution but is nearly always less crucial than doing a
superior job of training and retraining employees.
should take top priority in building competitively
valuable core competencies.
entails filling key
managerial slots with people who are good at figuring out what needs to be done
and skilled in “making it happen” and delivering good results.
is particularly essential for executing a strategy to
keep a company’s costs lower than rivals’ and become the industry’s low-cost
leader.
is particularly important when the firm is pursuing
unrelated diversification or making a number of new acquisitions in related
businesses.
4.
value:
2.00
points
Acquiring
an existing firm operating in a foreign country rather than undertaking
internal development may be the least risky and cost-efficient means of
overcoming entry barriers such as
putting the acquiring firm’s strategy into place.
gaining access to local distribution networks, building
supplier networks, and establishing working relationships with key government
officials.
accelerating efforts to build a strong market presence.
All of these choices are correct.
moving directly to the task of transferring resources and
personnel, and integrating and redirecting activities into the acquiring firm’s
operation.
5.
value:
2.00
points
Which
isnotone of the four conditions that make
entry via an internally developed start-up strategy in a foreign country
appealing?
When adding new production capacity will adversely impact
the supply-demand balance in the local market
All of these choices are correct.
Having scale economies
to compete against local rivals
When creating an internal start-up is cheaper than making
an acquisition
Having the ability to gain good distribution access
6.
value:
2.00
points
Using
domestic plants as a production base for exporting goods to selected foreign
country markets
can be an excellent
initial strategy to pursue international sales.
works well when a firm does not have the financial
resources to employ cross-market subsidization.
can be a powerful strategy because the company is not
vulnerable to fluctuating exchange rates.
can be a competitively successful strategy when a company
is focusing on vacant market niches in each foreign country.
is usually a weak strategy when competitors are pursuing
multicountry strategies.
7.
value:
2.00
points
The
consequences of pursuing a strategy that has unethical or shady components
include
customer defections and loss of reputation.
the costs of providing remedial education and ethics
training to company personnel.
lower stock prices.
All of these choices
are correct.
incurring potentially large legal and investigative
costs, government fines, and civil penalties.
8.
value:
2.00
points
The
character of a company’s corporate culture is a product of
the company’s core values and business principles.
All of these choices
are correct.
the work practices and behaviors that define “how we
do things around here.”
its style of operating and ingrained behaviors and
attitudes.
the “chemistry” that permeates its work
environment.
9.
value:
2.00
points
The
businesses in a diversified company’s lineup exhibit good resource fit when
the resource requirements of each of its businesses
exactly match the resources the company has available.
its individual
businesses add to a company’s resource strengths and when it has the resources
to adequately support the requirements of its businesses as a group without
spreading itself too thin.
each business unit produces sufficient cash flows over
and above what is needed to build and maintain the business, thereby providing
the parent company with enough cash to pay shareholders a generous and steadily
increasing dividend.
each business unit generates just enough cash flow
annually to fund its own capital requirements and thus does not require cash
infusions from the corporate parent.
there are enough cash cow businesses to support the
capital requirements of the cash hog businesses.
10.
value:
2.00
points
Experience
indicates that strategic alliances
are generally successful.
work well in cooperatively developing new technologies
and new products but seldom work well in promoting greater supply chain
efficiency.
work best when they are aimed at achieving a mutually
beneficial competitive advantage for the allies.
stand a reasonable
chance of helping a company reduce competitive disadvantage but very rarely
form the basis of a durable competitive
advantage over rivals.
are usually a company’s best approach to building a
distinctive competence.
11.
value:
2.00
points
A
company’s strategy needs to be ethical because
of the risks of getting caught and prosecuted by
governmental authorities if an unethical strategy is used.
a strategy that is
unethical not only damages the company’s reputation, but it can also have
costly consequences.
of the dangers that top management will be embarrassed if
the company’s unethical behavior is publicly exposed.
unethical strategies are inconsistent with or else weaken
the corporate culture.
everyone is an ethics watchdog, and somebody is sure to
blow the whistle on the company’s unethical behavior.
12.
value:
2.00
points
Strategic
alliances, joint ventures, and cooperative agreements between domestic and
foreign firms are a potentially fruitful means for the partners to
enter additional country markets.
fill competitively important gaps in their technical
expertise and/or knowledge of local markets.
gain better access to scale economies in production
and/or marketing.
All of these choices
are correct.
share distribution facilities and dealer networks, thus
mutually strengthening their access to buyers.
13.
value:
2.00
points
One of
the suggested advantages of an unrelated diversification strategy is that it
increases strategic fit opportunities and the potential
for a 1 + 1 = 3 outcome on the bottom line.
spreads the
stockholders’ risks across a group of truly diverse businesses.
expands a firm’s competitive advantage opportunities to
include a wider array of businesses.
results in having more cash cow businesses than cash hog
businesses.
facilitates capturing the financial fits among sister
businesses (as compared to a strategy of related diversification).
14.
value:
2.00
points
Dispersing particular value
chain activities across many countries rather than concentrating them in a select
few countries can be more advantageous when
buyer-related
activities (such as sales, advertising, after-sale service and technical
assistance) need to take place close to buyers.
All
of these choices are correct.
it
helps hedge against the risks of exchange rate fluctuations, supply
disruptions, and adverse political developments.
high transportation costs make it
uneconomical to operate from one or just a few locations.
there
are diseconomies of scale in trying to operate from a single location.
15.
value:
2.00
points
The
basic premise of unrelated diversification is that
the least risky way to diversify is to seek out
businesses that are leaders in their respective industry.
any company that can
be acquired on good financial terms and has satisfactory growth and earnings
potential represents a good acquisition and a good business opportunity.
the best way to build shareholder value is to acquire
businesses with strong cross-business financial fit.
the best companies to acquire are those that offer the
greatest economies of scope rather than the greatest economies of scale.
the task of building shareholder value is better served
by seeking to stabilize earnings across the entire business cycle than by
seeking to capture cross-business strategic fits.
17.
value:
2.00
points
A
belief in ethical relativism leads to the conclusion that
ethical standards are determined objectively (rather than
subjectively).
whether the payment of
bribes and kickbacks should be deemed ethical or unethical depends on the moral
standards, values, beliefs, convictions, and business norms that prevail in
particular cultures, societies, countries, or circumstances.
because ethical standards are subjective, it is perfectly
appropriate for each company to define and implement its own ethical principles
of right and wrong as concerns the use of underage labor and the payment of
bribes and kickbacks.
standards of right and wrong are governed by what is
legal in a given country; thus, whether the use of underage labor and the
payment of bribes and kickbacks is ethical or unethical is governed by local
law.
ethical standards are objective and universal; thus,
whether the use of underage labor and the payment of bribes and kickbacks
should be deemed ethical or unethical definitely is not dependent on the moral
standards, values, beliefs, convictions, and business norms that prevail in
particular cultures, societies, countries, or circumstances.
18.
value:
2.00
points
Once a
company has decided to employ one of the five basic competitive strategies,
then it must also consider such additional strategic choices as
whether and when to go on the offensive and initiate
aggressive strategic moves to improve the company’s market position.
whether to bolster the company’s market position by
merging with or acquiring another company.
whether to form strategic alliances and collaborative
partnerships to add to its accumulation of resources and competitive
capabilities.
whether to integrate forward or backward into more stages
of the industry value chain.
All of these choices
are correct.
19.
value:
2.00
points
First-mover
advantages are unlikely to be present in which one of the following instances?
when first-time customers remain strongly loyal to
pioneering firms in making repeat purchases
when rapid market
evolution (due to fast-paced changes in technology or buyer preferences)
presents opportunities to leapfrog a first-mover’s products with more
attractive next-version products
when early commitments to new technologies, new-style
components, new or emerging distribution channels, and so on can produce an
absolute cost advantage over rivals
when pioneering helps build a firm’s image and reputation
with buyers
when moving first can constitute a preemptive strike,
making imitation extra hard or unlikely
21.
value:
2.00 points
Which
one of the following isnota substantive culture-changing action
that a company’s managers can undertake to alter a problem culture?
screening all candidates for new positions carefully and
hiring only those who appear to fit in with the new culture
urging company
personnel to search outside the company for work practices and operating
approaches that may be an improvement over what the company is presently doing
revising policies and procedures in ways that will help
drive cultural change
promoting individuals who have stepped forward to
advocate the shift to a different culture and who can serve as role models for
the desired cultural behavior
designing compensation incentives that boost the pay of
teams and individuals who display the desired cultural behaviors and hit
change-resisters in the pocketbook
22.
value:
2.00
points
The
options for allocating a diversified company’s financial resources include
making acquisitions to establish positions in new
businesses or to complement existing businesses.
funding long-range R&D ventures aimed at opening
market opportunities in new or existing businesses.
investing in ways to strengthen or grow existing
businesses.
All of these choices
are correct.
paying off existing debt, increasing dividends, building
cash reserves, or repurchasing shares of the company’s stock.
23.
value:
2.00
points
Which
of the following isnotone of the problems and risks of
cross-border strategic alliances, that is, between domestic and foreign firms?
Becoming overly dependent on another company for
essential expertise and competitive capabilities
Suspicions about whether allies are being forthright in
exchanging information and expertise
Overcoming language and cultural barriers, and the
sometimes extensive managerial time required for trust-building, communication,
and coordination
Making it harder to
pursue a multidomestic strategy as compared to a global strategy
The trouble allies can have reaching mutually agreeable
ways to deal with key issues
24.
value:
2.00
points
Opportunities
for cross-business strategic fit exist
in production and distribution activities only.
in sales and marketing activities only.
in supply chain activities only.
in R&D and technology activities only.
anywhere along the
respective value chains of related businesses; no one place is best.
25.
value:
2.00
points
When
evaluating strategic fit benefits that related diversification can deliver, one
must keep in consideration a number of factors. Which one isnotrelevant?
The capture of cross-business strategic fits benefits is
possible only through related diversification.
Related
diversification is the process of holding the stock of many businesses in a
portfolio.
Shareholder value is created when the diversified
company’s profitability exceeds expectations.
Shareholder value stemming from a diversified business
cannot be replicated by simply owning a diversified portfolio of stocks.
Cross-business strategic fit benefits are not
automatically realized; the benefits materialize only after management has
successfully pursued internal actions to capture them.
26.
value:
2.00
points
The
three tests for judging whether a particular diversification move can create
value for shareholders are the
industry attractiveness test, the profitability test, and
the shareholder value test.
attractiveness test,
the cost-of-entry test, and the better-off test.
shareholder value test, the cost-of-entry test, and the
profitability test.
strategic fit test, the competitive advantage test, and
the return on investment test.
resource fit test, the profitability test, and the
shareholder value test.
27.
value:
2.00
points
The
most important strategy-making guidance that comes from drawing a Nine-Cell
Industry Attractiveness-Competitive Strength Matrix is
why cash cow businesses are more valuable than cash hog
businesses.
which businesses are in industries with profitable value
chains and which are in industries with money-losing value chains.
which businesses have the biggest competitive advantages
and which ones confront serious competitive disadvantages.
which businesses in the portfolio have the most potential
for strategic fit and resource fit.
that corporate
resources should be concentrated on those businesses enjoying both a higher
degree of industry attractiveness and competitive strength and that businesses
having low competitive strength in relatively unattractive industries should be
looked at for possible divestiture.
28.
value:
2.00
points
Which
of the following isnotsomething a company should usually
consider in crafting a strategy of social responsibility?
making charitable contributions and donating money and
the time of company personnel to community service endeavors
actions to protect or enhance the environment
actions to ensure the company has an ethical strategy and
operates honorably and ethically
actions to benefit
shareholders (such as raising the dividend to boost the stock price)
actions to create a workforce diversity program
29.
value:
2.00
points
A think
global, act global approach to crafting a global strategy involves
selling much the same products under the same brand names
everywhere and expanding into most, if not all, nations where there is
significant buyer demand.
pursuing the same basic competitive strategy theme
(low-cost, differentiation, best-cost, and focused) in all countries where the
firm does business.
integrating and coordinating the company’s strategic
moves worldwide.
utilizing the same competitive capabilities, distribution
channels, and marketing approaches worldwide.
All of these choices
are correct.
30.
value:
2.00
points
In a
diversified company, the competitive advantage potential of cross-business
strategic fit is greater when
businesses included in the corporate portfolio compete in
fast-growing industries.
the strategy maps of the various business units converge.
valuable opportunities
exist to transfer skills, technology, or intellectual capital from one business
to another, combine the performance of related activities, or share the use of
a well-respected brand name across multiple products or service categories.
the business lineup includes a number of cash cows.
competition is less intense and driving forces are
relatively weak.
31.
value:
2.00
points
Which
one of the following isnota good example of a defensive strategy
to protect a company’s market share and competitive position?
signaling challengers that retaliation is likely in the
event that they launch an attack
adding new features or models and otherwise broadening
the product line to close off vacant niches and gaps to opportunity-seeking
challengers
thwarting the efforts of rivals to attack with lower
prices by maintaining economy-priced options of its own
making early announcements about impending new products
or price changes to induce potential buyers to postpone switching
engaging in a
preemptive strike strategy in an effort to discourage rivals from being aggressive
33.
value:
2.00
points
Which
one of the following isnota benefit of prescribing policies and
operating procedures to aid management’s task of implementing strategy?
helping enforce consistency in how particular activities
are performed
providing top-down guidance to operating managers,
supervisory personnel, and employees regarding how to alter past practice and
how things need to be done now
promoting the creation of a can-do work climate that
facilitates good strategy execution
helping build employee
commitment to adopting best practices and using the tools of TQM and Six Sigma
Two answers are correct: helping enforce consistency
in how particular activities are performed, and providing top-down guidance to
operating managers, supervisory personnel, and employees regarding how to alter
past practice and how things need to be done now.
34.
value:
2.00
points
Vertical
integration strategies
are one of the best strategic options for helping
companies win the race for global market leadership.
extend a company’s
competitive and operating scope because its operations extend across more parts
of the total industry value chain.
are a cost-effective means of expanding a company’s
lineup of products and services.
are particularly effective in boosting a company’s
ability to expand into additional geographic markets, particularly the markets
of foreign countries.
are a good strategy option for improving a company’s
supply chain management capabilities, pursuing efforts to remodel a company’s
value chain, achieving direct control over the costs of performing value chain
activities, and gaining access to buyers.
36.
value:
2.00
points
Which
of the following isnotamong the types of actions and
initiatives undertaken by management in the strategy execution process?
building an organization capable of executing the
strategy
instituting policies and procedures that facilitate
rather than impede strategy execution
pushing for continuous improvement in how value chain
activities are performed
tying rewards directly to the achievement of strategic
and financial targets and to good strategy execution
deciding which core
competencies and value chain activities to leave as is and which ones to
overhaul and improve
37.
value:
2.00
points
The
purpose of managing by walking around or MBWA is to
gather information
about what is happening from people at different organizational levels and
learn firsthand how well the strategy execution process is proceeding.
be visible and accessible to employees.
gather information about what strategy to follow and to
learn what competitors are doing.
learn more about company operations and see how
activities are really being done.
give employees a chance to make suggestions for
improvement.
38.
value:
2.00
points
Which
of the following isnota typical strategic objective or
benefit that drives mergers and acquisitions?
to gain quick access to new technologies or other
resources and capabilities
to fundamentally alter a company’s trajectory and improve
its business outlook
to expedite shifting from one strategy to another and
gain better access to additional financial capital
to extend a company’s business into new product
categories and/or expand a company’s geographic coverage
to create a more cost-efficient operation out of the
combined companies
39.
value:
2.00
points
Which
of the following isnota strategic option companies should
consider in tailoring their strategy to fit circumstances of emerging country
markets?
All of these choices
are correct.
Try to change the local market to better match the way
the company does business elsewhere.
Be prepared to modify aspects of the company’s business
model to accommodate local circumstances.
Prepare to compete on the basis of low price.
Enter only those emerging markets that provide profit
sanctuaries by offering opportunities for offensive strategies, such as
preemptive strikes.
42.
value:
2.00
points
Good
strategy execution
allows companywide
performance measures to be met.
requires a team effort with managers who have
strategy-executing responsibility and making all employees active participants
in the execution process.
All of these choices are correct.
requires getting things done effectively and efficiently.
requires middle and lower-level managers to ensure
strategy-critical activities are successfully implemented.
43.
value:
2.00
points
Businesses
are said to be “related” when
many consumers buy the products/services of both
businesses.
they have several key suppliers and several key customers
in common.
their value chains
possess competitively valuable cross-business relationships that present
opportunities to transfer skills and
capabilities from one business to another, share resources or facilities to
reduce costs, share use of a well-known brand name, and/or create mutually
useful resource strengths and capabilities.
their products are both sold through retailers.
their value chains have the same number of primary
activities.
44.
value:
2.00
points
Which
one of the following is an example of an offensive strategy?
pursuing continuous
product innovation to draw sales and market share away from less innovative
rivals
blocking the avenues open to challengers
signaling challengers that retaliation is likely
maintaining a war chest of cash and marketable securities
introducing new features or models to fill vacant niches
in its overall product offering and better match the product offerings of key
rivals
45.
value:
2.00
points
A
strategic alliance
is a collaborative arrangement in which companies join
forces to defeat mutual competitive rivals.
is a form
