Question 1

When a bank offers horne mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Accepted Answer

Horizontal integration involves acquiring or merging with competitors in the same industry, not offering different products to existing customers. The bank is using a cross-selling strategy.

Question 2

Horizontal integration ahnost always increases rivalry in an industry.

Accepted Answer

Horizontal integration involves the merger or acquisition of companies operating at the same level of the supply chain or in the same industry. This can lead to consolidation and reduce the number of competitors in the market, thereby decreasing rivalry. However, if the merged companies still have a significant market share after the integration, it may spur antitrust concerns and increase regulatory scrutiny, which can create rivalry. Overall, the impact on rivalry depends on the specifics of the merger, market conditions, and regulatory environment.

Question 3

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

Accepted Answer

When companies merge or acquire other companies horizontally, they can eliminate overlapping resources such as facilities, staff, and operations. This can result in lower costs through economies of scale and increased efficiency.

Question 4

Vertical integration can raise costs if, over time, a company continues to purchase inputs from company-owned suppliers when independent suppliers can supply the same inputs at lower cost.

Accepted Answer

Vertical integration can lead to higher costs if company-owned suppliers end up being more expensive than independent suppliers. It is important for a company to continually evaluate the costs and benefits of their supplier relationships.

Question 5

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products.Tina's Technologies is utilizing horizontal integration.

Accepted Answer

The expansion of operations into an industry that produces inputs for the company's products is an example of vertical integration, not horizontal integration. Horizontal integration refers to the expansion of operations into the same industry or market, such as through the acquisition of a competitor.

Question 6

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Accepted Answer

The answer of The term bureaucratic costs refers to costs...

Question 7

Unfortunately, horizontal integration can not be accomplished by acquisitions or mergers.

Accepted Answer

Horizontal integration can be achieved through acquisitions or mergers, as it involves merging with or acquiring companies that are in the same industry or line of business.

Question 8

An advantage of horizontal integration is that it can lower a company's cost structure by creating increasing economies of scale.

Accepted Answer

Horizontal integration involves acquiring or merging with companies in the same industry. This can lead to increased efficiency and cost savings by consolidating operations and leveraging economies of scale.

Question 9

Oracle Corp., based in Reno, Nevada, has purchased several other companies to become the world's largest maker of database software.This strategy is known as the strategy of acquisition.

Accepted Answer

The statement is correct. Oracle Corporation has traditionally pursued a strategy of growth through acquisition, and has bought several companies to expand its portfolio of products and services.

Question 10

Vertical integration is undertaken to support the competitive position of a company's core business.

Accepted Answer

Vertical integration involves a company acquiring or controlling other businesses that are involved in the production, distribution, or supply of its products or services. This is often done to improve efficiency and control over the production process and to maintain a competitive advantage in the company's core business.

Question 11

Vertical integration can strengthen a company's differentiation advantage.

Accepted Answer

Vertical integration allows a company to control more aspects of its supply chain, which can enhance its ability to deliver unique products or services that stand out from competitors. Therefore, vertical integration can strengthen a company's differentiation advantage.

Question 12

Product bundling occurs when a finn offers a range of products that are sold together at a single price.

Accepted Answer

Product bundling is the practice of selling several products or services as a single combined unit. This helps businesses to increase their profitability by offering savings to customers and encouraging them to purchase more items than they originally intended.

Question 13

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

Accepted Answer

The answer of A merger occurs when one company uses...

Question 14

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Accepted Answer

Horizontal integration can lead to both low cost advantages and differentiation advantages. By acquiring and merging with other companies that operate in the same industry or market, a firm can gain economies of scale and scope, reduce production costs, and improve supply chain efficiency. This can help the firm to offer lower prices or higher quality products compared to its competitors, thus creating a differentiation advantage.

Question 15

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Accepted Answer

When demand is unpredictable, it is difficult to forecast how much of each product needs to be produced or how much of a particular resource needs to be allocated, which can result in overproduction, underproduction, or inventory shortages. This can lead to inefficiencies and increased costs along the value chain. Therefore, vertical integration can be risky in such situations.

Question 16

Managers use corporate-level strategy to identify which industries a company should compete in to maximize long­
run profitability.

Accepted Answer

This statement is true. Corporate-level strategy helps managers to determine the industries in which a company can excel and achieve long-term profitability.

Question 17

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Accepted Answer

The answer of A company should first choose a corporate-level...

Question 18

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Accepted Answer

Horizontal integration involves a company acquiring or merging with other companies in the same industry or market. This allows the company to gain more control over suppliers or buyers, as they own a larger portion of the market share. With increased bargaining power, companies can negotiate better deals, lower costs, and increase their profitability at the expense of suppliers or buyers.

Question 19

Transfer pricing refers when a company is taken advantage of by another company it does business with after it has made an investment in expensive specialized assets to better meet the needs of the other company.

Accepted Answer

Transfer pricing refers to the pricing of goods, services, and intangibles between related entities within a multinational corporation, not the exploitation of a company by another after investment in specialized assets.

Question 20

When a company stays inside one industry, the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the envirornnent.

Accepted Answer

Staying inside one industry can limit opportunities for growth and increase vulnerability to environmental changes, hence making it difficult to sustain a successful business model and strategies over time.

Quiz 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

When a bank offers horne mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Horizontal integration ahnost always increases rivalry in an industry.

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

Vertical integration can raise costs if, over time, a company continues to purchase inputs from company-owned suppliers when independent suppliers can supply the same inputs at lower cost.

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products.Tina's Technologies is utilizing horizontal integration.

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Unfortunately, horizontal integration can not be accomplished by acquisitions or mergers.

An advantage of horizontal integration is that it can lower a company's cost structure by creating increasing economies of scale.

Oracle Corp., based in Reno, Nevada, has purchased several other companies to become the world's largest maker of database software.This strategy is known as the strategy of acquisition.

Vertical integration is undertaken to support the competitive position of a company's core business.

Vertical integration can strengthen a company's differentiation advantage.

Product bundling occurs when a finn offers a range of products that are sold together at a single price.

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Managers use corporate-level strategy to identify which industries a company should compete in to maximize long run profitability.

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Transfer pricing refers when a company is taken advantage of by another company it does business with after it has made an investment in expensive specialized assets to better meet the needs of the other company.

When a company stays inside one industry, the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the envirornnent.

Quiz 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

When a bank offers horne mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Horizontal integration ahnost always increases rivalry in an industry.

Horizontal integration can help lower costs when it allows a company to reduce the duplication of resources.

Vertical integration can raise costs if, over time, a company continues to purchase inputs from company-owned suppliers when independent suppliers can supply the same inputs at lower cost.

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products.Tina's Technologies is utilizing horizontal integration.

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Unfortunately, horizontal integration can not be accomplished by acquisitions or mergers.

An advantage of horizontal integration is that it can lower a company's cost structure by creating increasing economies of scale.

Oracle Corp., based in Reno, Nevada, has purchased several other companies to become the world's largest maker of database software.This strategy is known as the strategy of acquisition.

Vertical integration is undertaken to support the competitive position of a company's core business.

Vertical integration can strengthen a company's differentiation advantage.

Product bundling occurs when a finn offers a range of products that are sold together at a single price.

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Managers use corporate-level strategy to identify which industries a company should compete in to maximize long­ run profitability.

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Transfer pricing refers when a company is taken advantage of by another company it does business with after it has made an investment in expensive specialized assets to better meet the needs of the other company.

When a company stays inside one industry, the problems of sustaining a successful business model and strategies over time can be difficult because of changing conditions in the envirornnent.

Managers use corporate-level strategy to identify which industries a company should compete in to maximize long run profitability.