Question 1

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

Accepted Answer

A product development strategy focuses on bringing new products to the market or improving existing ones, while pricing, selling, and distributing strategies fall under marketing and sales strategies.

Question 2

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.

Accepted Answer

The answer of The automobile industry is currently experimenting with...

Question 3

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.

Accepted Answer

Market development strategy involves expanding the market for existing products by finding new uses or new markets for them. Church & Dwight has used this strategy for its Arm & Hammer brand baking soda by promoting it not just for baking but also for household cleaning, personal hygiene, and other uses.

Question 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.

Accepted Answer

A market development strategy focuses on expanding the current market for existing products or identifying and developing new markets for current products.

Question 5

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

Accepted Answer

It is common for large organizations to have multiple business units, each with their own departments and functional strategies tailored to their specific goals and objectives.

Question 6

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

Accepted Answer

This is a common practice in supply chain management where suppliers agree to be backup suppliers for each other's parts to ensure a continuous supply of components in case one supplier is unable to meet the demand.

Question 7

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.

Accepted Answer

This statement is false. Research actually suggests that the use of work teams can enhance quality and productivity as well as increase employee satisfaction and commitment due to the benefits of collaboration and shared ownership of tasks. However, effective management and accountability structures are necessary for optimal team performance.

Question 8

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

Accepted Answer

A financial strategy is designed to ensure that the company's financial resources are used in the most effective way to support the organization's overall strategy. It involves analyzing financial data and making recommendations for how to allocate resources, manage risks, and maximize returns. Financial strategy is an integral part of corporate strategy, as it helps to ensure that the organization's strategic goals can be achieved in a financially sustainable way.

Question 9

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

Accepted Answer

The use of dynamic pricing is one of the advantages of online marketing, as it allows companies to adjust prices in real-time based on market demands, customer behavior, and other factors. This helps businesses to remain competitive and maximize profits.

Question 10

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.

Accepted Answer

A push strategy involves focusing marketing efforts on the next party in the distribution channel (e.g., retailers or distributors), not on consumer advertising. Consumer advertising to build brand awareness is a characteristic of a pull strategy, where the goal is to create demand among consumers so they request the product from retailers.

Question 11

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

Accepted Answer

In a leveraged buyout, the acquiring company uses a large amount of debt to finance the acquisition of the target company. The debt is typically paid off using the cash flows and assets of the acquired company, meaning that the acquired company is essentially paying for its own acquisition.

Question 12

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

Accepted Answer

Logistics strategy is concerned with the movement of goods throughout the supply chain, including the transportation, storage, and distribution of raw materials, work-in-progress products, and finished goods. It aims to optimize the movement of products from supplier to customer while minimizing costs and lead times.

Question 13

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

Accepted Answer

Nike Inc. has achieved a differentiation competitive advantage by investing heavily in R&D to create innovative products with unique features, such as the Nike Air technology in their shoes. This leader R&D functional strategy has allowed them to differentiate themselves from competitors and maintain a strong brand image.

Question 14

The continuous improvement system was developed by Deming.

Accepted Answer

Deming was a well-known quality management guru who developed the continuous improvement system, also known as the PDCA (Plan-Do-Check-Act) cycle.

Question 15

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.

Accepted Answer

Penetration pricing involves offering a low price to quickly gain market share and establish dominance in the industry. This takes advantage of the experience curve, which allows the pioneer to lower their costs as they gain more experience and produce at larger volumes. The goal is to create a large customer base that will lead to long-term profitability despite the initial low prices.

Question 16

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

Accepted Answer

W. Edwards Deming did in fact strongly recommend sole sourcing as the only manageable way to obtain high supplier quality. This was based on his belief that reducing the number of suppliers allowed for stronger relationships and a better understanding of each other's processes, leading to better quality control.

Question 17

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.

Accepted Answer

Market development strategy is when a company expands its market by introducing an existing product or service to a new market segment or geographic location. So, when Colgate-Palmolive or Unilever take a successful product and market it in a different part of the world, it falls under the category of market development strategy.

Question 18

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

Accepted Answer

The functional strategy should align with and support the overall strategy of the business unit it belongs to, rather than being determined independently.

Question 19

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

Accepted Answer

The statement is incorrect. The choice between equity and debt financing for diversification is not dependent on whether it is related or unrelated. It depends on various factors such as the company's financial position, risk tolerance, and cost of capital. Generally, equity financing is preferred for businesses that have growth potential, while debt financing is preferred for businesses with predictable cash flows.

Question 20

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.

Accepted Answer

This statement accurately describes the key components of an operations strategy.

Quiz 8: Strategy Formulation: Functional Strategy and Strategic Choice