Deck 5: Strategies in Action

Question 1

Franchising is an effective means of implementing forward integration.

Answer 1

True

Question 2

The practice of a firm borrowing money to fund dividend payouts to itself is known as dividend recapitalization.

Answer 2

True

Question 3

If a firm's present suppliers are expensive and unreliable in meeting the firm's needs for parts, components, and/or raw materials, the firm should pursue a horizontal integration strategy.

Answer 3

False

Question 4

Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins, and improved cash flow.

Question 5

TFDonalds currently owns more than 50 percent of its restaurants.

Question 6

Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously.

Question 7

When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.

Question 8

Horizontal integration is seeking ownership or increased control over competitors.

Question 9

Long-term objectives represent the results expected from pursuing certain strategies.

Question 10

Divestiture is selling all of a company's assets, in parts, for their tangible worth.

Question 11

Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.

Question 12

A chief executive officer is located in the divisional level of a large firm.

Question 13

Gaining ownership or increased control over distributors or retailers is called forward integration strategy.

Question 14

A strategy of seeking ownership or increased control of a firm's suppliers is backward integration.

Question 15

Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.

Question 16

Objectives provide direction and allow for organizational synergy.

Question 17

Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.

Question 18

"If it ain't broke, don't fix it" refers to managing by crisis.

Question 19

Market penetration, market development, and product development are intensive strategies.

Question 20

A growing trend is for franchisers to buy out their part of the business from their franchisees.

Question 21

Unrelated diversification is an appropriate strategy when an organization's present channels of distribution can be used to market the new products to current customers.

Question 22

Divestiture has become a popular strategy for firms to focus on their core business and become more diversified.

Question 23

Although bankruptcy can be an effective type of retrenchment strategy, it does not allow firms to avoid major debt obligations and to void union contracts.

Question 24

Deutsche Bank's entrance into the casino business in Las Vegas is an example of related diversification.

Question 25

Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.

Question 26

Retrenchment and turnaround are the same strategy.

Question 27

Secondary buyouts decreased substantially from 2011 to 2012.

Question 28

There are four basic types of diversification: concentric, conglomerate, forward, and backward.

Question 29

Unrelated diversification may be an especially effective strategy when an organization's basic industry is experiencing increasing annual sales and profits.

Question 30

Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.

Question 31

Stockton, a city in California, declared Chapter 9 bankruptcy in 2012 to avoid having to close key functions such as their police and fire departments.

Question 32

Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.

Question 33

Chapter 9 bankruptcy applies to municipalities.

Question 34

Product development is a strategy that seeks increased sales by improving or modifying present products or services.

Question 35

Diversification strategies are becoming more popular as organizations are finding it easier to manage diverse business activities.

Question 36

Market development includes introducing present products into new geographic areas.

Question 37

An appropriate strategy when an organization has excess production capacity is market development.

Question 38

Chapter 7 bankruptcy is a liquidation procedure used only when a firm sees no hope of being able to operate successfully or to obtain necessary creditor agreement.

Question 39

Selling a division or part of an organization is called divestiture.

Question 40

The acquisition of human-resources software and consulting services company Kenexa by IBM is an example of related diversification.

Question 41

For consumers who are price-sensitive, cost leadership emphasizes producing standardized products at a very low per-unit cost.

Question 42

Liquidation is often appropriate when retrenchment and divestiture have failed.

Question 43

An acquisition occurs when a large organization purchases a smaller one or vice versa.

Question 44

A best-value strategy offers products or services to a wide range of customers at the best price-value available on the market.

Question 45

Differentiation guarantees competitive advantage.

Question 46

Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.

Question 47

A differentiation strategy can only be achieved with a large target market.

Question 48

Cooperative arrangements and joint ventures are being used increasingly.

Question 49

A differentiation strategy can be especially attractive when the industry has many different niches and segments, thereby allowing a focuser to pick a competitively attractive niche suited to its own resources.

Question 50

A low-cost focus strategy can be especially attractive when the target market niche is small.

Question 51

According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and decentralization.

Question 52

A low-cost focus strategy offers products or services to a small range of customers at the lowest price available on the market.

Question 53

A cost leadership strategy can be especially effective when most buyers use the product in the same ways.

Question 54

In a turbulent, high-velocity market, a lead-change strategy is best whenever the firm has the resources to pursue this approach.

Question 55

Jiffy Lube International would be a good example of a firm seeking the best-value focus strategy.

Question 56

When an acquisition or merger is not desired by both parties, it can be called a takeover or hostile takeover.

Question 57

The most effective differentiation bases are those that are hard or expensive for rivals to duplicate.

Question 58

Divestiture would be an appropriate strategy when a need exists to introduce a new technology quickly.

Question 59

The number of hostile takeovers is on the rise.

Question 60

White knight is a term that refers to a firm that agrees to acquire another firm when the other firm is facing a hostile takeover by some company.

Question 61

Liberty Media Corp. selling its Starz television network is an example of which type of strategy?

A) Related diversification
B) Unrelated diversification
C) Retrenchment
D) Divestiture
E) Liquidation

Question 62

The strategic-management process is just as vital for small companies as for large companies.

Question 63

Strategists in governmental organizations operate with far more strategic autonomy than their counterparts in private firms.

Question 64

Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does not allow a firm to concentrate on core competencies.

Question 65

Public enterprises generally cannot diversify into unrelated businesses or merge with other firms.

Question 66

While outsourcing manufacturing, tech support, and back-office work is quite common, it is still unheard of for companies to outsource product design.

Question 67

Integration strategies are sometimes collectively referred to as which of the following categories of strategies?

A) Horizontal integration
B) Diversification
C) Vertical integration
D) Stuck-in-the-middle
E) Hierarchical integration

Question 68

Research shows strategic management in small firms is more formal than in large firms.

Question 69

Long-term objectives are needed at which level(s)in an organization?

A) Corporate
B) Divisional
C) Functional
D) All of the above
E) None of the above

Question 70

First mover advantages refer to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.

Question 71

When the PE firm Clayton, Dubilier & Rice bought David's Bridal from the PE firm Leonard Green & Partner LP this was an example of

A) dividend recapitalization.
B) a joint venture.
C) a secondary buyout.
D) a leveraged buyout.
E) a merger.

Question 72

The nonprofit sector is America's largest employer.

Question 73

What principle is built on the idea that there is no general plan for which way to go and what to do?

A) Managing by crisis
B) Managing by extrapolation
C) Managing by objectives
D) Managing by hope
E) Managing by subjectives

Question 74

Which level of strategy is most likely NOT present in small firms?

A) Company
B) Functional
C) Divisional
D) Operational
E) All of the above are present in small firms.

Question 75

A leveraged buyout occurs when a firm's management and other private investors use borrowed funds to buy out the firm's shareholders.

Question 76

What principle is based on the belief that the true measure of a really good strategist is the ability to solve problems?

A) Managing by crisis
B) Managing by objectives
C) Managing by extrapolation
D) Managing by exception
E) Managing by hope

Question 77

Financial objectives involve all of the following EXCEPT

A) growth in revenues.
B) larger market share.
C) higher dividends.
D) greater return on investment.
E) a rising stock price.

Question 78

IKEA Group investing $1.9 billion in India to open 25 new stores between 2013 and 2018 is an example of which type of strategy?

A) Forward integration
B) Backward integration
C) Horizontal integration
D) Market development
E) Product development

Question 79

The controversial practice of a company borrowing money simply to fund dividend payouts to itself is known as

A) a leveraged buyout.
B) retrenchment.
C) first mover advantage.
D) dividend recapitalization.
E) dividend divestiture.

Question 80

Amazon installing "Amazon Lockers" in grocery, 7-Eleven, and drugstores that accept packages for later pickup, in order to combat issues with missing deliveries or having packages stolen, is an example of which type of strategy?

A) Forward integration
B) Backward integration
C) Horizontal integration
D) Related diversification
E) Unrelated diversification