Deck 8: Strategy Formulation: Functional Strategy and Strategic Choice

Question 1

Leveraged buyouts are also sometimes referred to as

A) leveraged bargains.
B) management buyouts.
C) management bargains.
D) coordinated buyouts.
E) debt buyouts.

Answer 1

B

Question 2

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
E) demand extension

Answer 2

C

Question 3

Which type of pricing takes advantage of the demand curve while the product is still novel and competitors are few to increase profits?

A) demand pricing
B) skim pricing
C) competitive pricing
D) penetration pricing
E) loss-leader pricing

Answer 3

B

Question 4

Which strategy is developed to pull together the various activities and competencies of each department so that corporate and business unit performance improves and resource productivity is maximized?

A) business strategy
B) competitive strategy
C) generic strategy
D) enterprise strategy
E) functional strategy

Question 5

A company may use which of the following trade promotions to "pull" their products through the distribution system?

A) discounts
B) in-store special offers
C) advertising allowances
D) coupons
E) consumer advertising

Question 6

The pricing,selling,and distributing of a product is referred to as a(n)________ strategy.

A) functional
B) marketing
C) operations
D) financial
E) human resource management

Question 7

When a company exchanges 200 shares of stock worth $20 each for 100 shares worth $40 each,they are using

A) tracking stock.
B) holding stock.
C) a leveraged buyout.
D) reverse stock split.
E) split stock.

Question 8

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
E) dynamic pricing

Question 9

A company that pioneers an innovation is called a

A) technological follower.
B) technological opportunist.
C) technological leader.
D) technological manufacturer.
E) technological entrepreneur.

Question 10

The strategy that deals with product and process innovation and improvement is known as a(n)________ strategy.

A) marketing
B) R&D
C) operations
D) financial
E) human resource management

Question 11

A company that imitates the products of competitors is referred to as a

A) technological follower.
B) technological opportunist.
C) technological leader.
D) technological manufacturer.
E) technological entrepreneur.

Question 12

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
E) loss-leader pricing

Question 13

If a company wishes to be a technological leader and also maintain a cost advantage,the appropriate R&D strategy would be to

A) increase the cost of the product.
B) lower the cost of the product or value activities by learning from the leader's experience.
C) avoid R&D costs through imitation.
D) create low-cost ways of performing value activities.
E) innovate in other activities to increase buyer value.

Question 14

When Intel opened four small-scale research facilities adjacent to universities to promote the cross-pollination of ideas,they were using which approach to R&D?

A) open innovation
B) differentiation
C) technology scouting
D) continuous improvement
E) technology leadership

Question 15

All of the following are benefits for a company to raising its debt levels EXCEPT

A) deter takeover attempts by other firms.
B) improve productivity.
C) improve cash flows.
D) force management to focus on core businesses.
E) improve strategic options available.

Question 16

P&G decreed that the company would search outside their organization for new ideas.To achieve this,the company used

A) technology scouts.
B) a technological follower strategy.
C) open sourcing.
D) outsourcing.
E) offshoring.

Question 17

The reconfiguring of people,processes,units,and technology to give customers exactly what they want and when they want it is known as

A) mass customization.
B) modular manufacturing.
C) a connected line batch flow.
D) open innovation.
E) a push marketing strategy.

Question 18

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.
E) Attempt to maximize the financial value of the firm.

Question 19

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.
E) an example of internal financing.

Question 20

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.
E) skimming the cream.

Question 21

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.
C) just-in-time sourcing.
D) backup sourcing.
E) parallel sourcing.

Question 22

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 logistics strategy.
D) can hinder quality.
E) hinders growth.

Question 23

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 low-cost ways of performing value activities.
E) innovate in other activities to increase buyer value.

Question 24

Companies such as Georgia-Pacific,Marriott,and Union Carbide view the ________ as an important way to differentiate themselves from the competition,to add value,and to reduce costs.

A) R&D function
B) logistics function
C) finance function
D) engineering function
E) purchasing function

Question 25

As it relates to operations,AMT stands for

A) Automated Manufacturing Technology.
B) Advanced Manufacturing Technology.
C) Asymptotic Manufacturing Technology.
D) Advanced Monotone Technology.
E) Automated Manufacturing Technician.

Question 26

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

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

Question 27

Church & Dwight uses the line extension strategy when they put the Arm & Hammer name on various new food products.

Question 28

Three trends are evident in logistics: outsourcing,the use of the Internet,and

A) centralization.
B) downsizing.
C) logistical partnerships.
D) computerization.
E) containerized shipping.

Question 29

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
E) human resource management

Question 30

When there are highly automated assembly lines making one mass-produced 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.
E) mass job flow.

Question 31

The importance of sole sourcing was supported by Deming to obtain high supplier quality.

Question 32

The use of 3-D printing demonstrates which manufacturing strategy?

A) continuous improvement
B) mass production
C) job shop
D) mass customization
E) just-in-time

Question 33

Continuous improvement is an operations concept developed by Deming and perfected by firms in

A) the United States.
B) Sweden.
C) Japan.
D) Germany.
E) Canada.

Question 34

A flexible manufacturing system is

A) one-of-a-kind production using skilled labor.
B) highly automated assembly lines making one mass-produced product using little human labor.
C) a grouping of parts into manufacturing families to produce a wide variety of mass-produced items.
D) a process utilizing the just-in-time (JIT) method of manufacturing.
E) standardization of components with each machine functioning like a job shop, but is positioned in the same order as the parts are processed.

Question 35

The concept of ________ was taken one step further in JIT II,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
E) all of the above

Question 36

A recent trend in information systems strategy used by multi-national corporations is

A) computerizing accounting.
B) automating customer service.
C) practicing follow-the-sun management.
D) replacing Fortran with Cobol in order to boost productivity.
E) replacing mainframe computers with robots.

Question 37

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) just-in-time sourcing.
D) backup sourcing.
E) parallel sourcing.

Question 38

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
E) human resource management

Question 39

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
D) mass customization
E) just-in-time

Question 40

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
E) human resource management

Question 41

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.

Question 42

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.

Question 43

In a leveraged buyout,the acquired company,in effect,pays for its own acquisition.

Question 44

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.

Question 45

The orientation of the functional strategy is dictated by its parent business unit's strategy.

Question 46

W.Edwards Deming,a well-known management consultant,strongly recommended sole sourcing as the only manageable way to obtain high supplier quality.

Question 47

The use of the Internet to market goods directly to the customer allows a company to use dynamic pricing.

Question 48

When Colgate-Palmolive 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.

Question 49

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.

Question 50

An example of the use of the leader R&D functional strategy to achieve a differentiation competitive advantage is Nike Inc.

Question 51

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.

Question 52

The automobile industry is currently experimenting with the strategy of mass customization in which pre-assembled sub-assemblies are delivered as they are needed to a company's assembly line workers.

Question 53

A financial strategy examines the financial implications of corporate and business-level strategic options and identifies the best financial course of action.

Question 54

Logistics strategy deals with the flow of products into and out of the manufacturing process.

Question 55

Equity financing is preferred for unrelated diversification while debt financing is preferred for related diversification.

Question 56

Two suppliers are the sole suppliers of two different parts,but they are also backup suppliers for each other's parts in parallel sourcing.

Question 57

A company,such as Church & Dwight,follows the market development strategy of developing new uses and/or markets for current products such as for its successful product: Arm & Hammer brand baking soda.

Question 58

The continuous improvement system was developed by Deming.

Question 59

A product development strategy deals with pricing,selling,and distributing a product.

Question 60

Each business unit has its own set of departments,each with its own functional strategy.

Question 61

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.
E) are not very expensive.

Question 62

Outsourcing is the alternative to vertical integration.

Question 63

Discuss W.Edwards Deming's position on sole sourcing.

Question 64

According to a recent survey by Deloitte Consulting,the most popular outsourced activity was

A) marketing.
B) sales.
C) finance.
D) R&D.
E) information technology.

Question 65

Which of the following is not one of the major outsourcing errors that should be avoided?

A) failure to keep core activities in-house
B) selecting the wrong vendor
C) writing a poor contract
D) micromanaging the outsourced activity to maintain control
E) overlooking personnel issues

Question 66

A company that 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
D) do everything
E) losing hand

Question 67

Give an example of a technological leader.

Question 68

The key to outsourcing is to purchase from outside only those activities that are not key to the company's distinctive competencies.

Question 69

What is a functional strategy?

Question 70

Multi-national corporations use sophisticated intranets to allow employees to practice follow-the-sun management,in which project team members living in one country can pass their work to team members in another country in which the workday is just beginning.

Question 71

Distinguish between a market development and a product development strategy.

Question 72

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) do everything
E) losing hand

Question 73

What is outsourcing? What are the seven major outsourcing errors that should be avoided?

Question 74

A company that has previously found great success pioneering an extremely successful product that is presently trying to turn another "long-shot" 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
E) losing hand

Question 75

What does a financial strategy examine?

Question 76

A corporation might have invested so much in a particular strategy that top management is unwilling to accept its failure.This is an example of which strategy to avoid?

A) follow the leader
B) hit another home run
C) arms race
D) do everything
E) losing hand

Question 77

The top factors in a successful ________ seemed to be a spirit of partnership,a well-designed agreement,joint governance,and consistent communication.

A) IT relationship
B) customer relationship management
C) outsourcing relationship
D) logistics relationship
E) accounting relationship

Question 78

Outsourcing is the reverse of vertical integration.

Question 79

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
E) losing hand

Question 80

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.
E) geographic integration.