Question 1

Entering new geographic areas is one way of pursuing market penetration.

Accepted Answer

Entering new geographic areas is a strategy for market development, not market penetration. Market penetration focuses on increasing sales of existing products in existing markets.

Question 2

A backward vertical integration strategy involves a firm entering a buyer's business.

Accepted Answer

Backward vertical integration involves a firm entering a supplier's business, not a buyer's.

Question 3

Vertical diversification occurs when a firm moves into a new industry that has important similarities with the firm's existing industry or industries.

Accepted Answer

Vertical diversification refers to a firm expanding its operations into different stages of production within the same industry, not into a new industry with similarities.

Question 4

A forward vertical integration strategy involves a firm entering a supplier's business.

Accepted Answer

A forward vertical integration strategy involves a firm expanding its operations to include activities closer to the end consumer, such as distribution or retail, rather than entering a supplier's business, which would be backward integration.

Question 5

Some firms use a backward vertical integration strategy when executives are concerned that a supplier has too much power over their firms.

Accepted Answer

Backward vertical integration involves a company acquiring or merging with its suppliers to reduce dependency and control over the supply chain, especially when suppliers hold significant power.

Question 6

Most unrelated diversification efforts are not successful.

Accepted Answer

Unrelated diversification often fails because it involves entering industries with no strategic fit or synergy with the company's existing operations, leading to challenges in management, resource allocation, and achieving competitive advantage.

Question 7

When pursuing a vertical integration strategy, a firm gets involved in new portions of the value chain.

Accepted Answer

Vertical integration involves a company expanding its operations into different stages of production or distribution within the same industry, thus engaging in new parts of the value chain.

Question 8

Entering a new retail chain is one way of achieving market penetration.

Accepted Answer

The answer of Entering a new retail chain is one...

Question 9

Horizontal integration strategies can take a firm into very different businesses.

Accepted Answer

Horizontal integration involves expanding a company's operations into the same level of the supply chain, often by acquiring or merging with competitors, rather than diversifying into different businesses.

Question 10

Market penetration involves trying to gain additional share of a firm's existing markets using existing products.

Accepted Answer

Market penetration is a growth strategy where a company aims to increase its market share in existing markets with its current product offerings.

Question 11

Firms using diversification strategies are those that enter entirely new industries.

Accepted Answer

Diversification strategies involve firms expanding into new industries to reduce risks and increase growth opportunities by not relying on a single market or product line.

Question 12

Product penetration involves creating new products to serve existing markets.

Accepted Answer

Product penetration refers to increasing the market share of existing products in existing markets, not creating new products.

Question 13

Market development involves taking existing products and trying to sell them within new markets.

Accepted Answer

Market development is a growth strategy that involves introducing existing products to new markets to increase sales and expand the customer base.

Question 14

Firms following a retrenchment strategy shrink one or more of their business units.

Accepted Answer

A retrenchment strategy involves reducing the scale or scope of a corporation's operations, often by closing or selling off business units, to improve financial stability and efficiency.

Question 15

Horizontal diversification occurs when a firm enters an industry that lacks any important similarities with the firm's existing industry or industries.

Accepted Answer

Horizontal diversification occurs when a firm expands into a new industry that is related or similar to its existing industry, not one that lacks similarities.

Question 16

Diversification requires a firm to move into new value chains.

Accepted Answer

Diversification involves expanding a firm's operations by entering into new industries or markets, which often means engaging in different value chains.

Question 17

Divestment refers to selling off part of a firm's operations.

Accepted Answer

Divestment involves a company selling off a portion of its business, assets, or operations, often to streamline operations or raise capital.

Question 18

Firms often rely on advertising to implement the concentration strategy of market penetration.

Accepted Answer

Advertising is a common tool used by firms to increase their market share within existing markets, which is the essence of a market penetration strategy.

Question 19

Forward vertical integration strategy can be useful for neutralizing the effect of powerful buyers.

Accepted Answer

Forward vertical integration allows a company to gain control over distribution or retail, reducing dependency on powerful buyers and potentially increasing market power.

Question 20

Many firms accomplish diversification through vertical integration strategies.

Accepted Answer

The answer of Many firms accomplish diversification through vertical integration...

Quiz 8: Selecting Corporate-Level Strategies