Question 1

Which of the following strategies was being used when Allied Corporation and Signal Companies formed Allied Signal?

Accepted Answer

A merger occurs when two or more companies combine to form a new company. In this case, Allied Corporation and Signal Companies joined forces to create Allied Signal, a new entity with a new brand and identity. Therefore, the correct answer is A) merger.

Question 2

The purchase of the supplier Carroll's Foods for its hog-growing facilities by Smithfield Foods,the world's largest pork processor,is an example of

Accepted Answer

Backward integration refers to a company acquiring a supplier in order to gain more control over its supply chain and ensure consistent quality of materials. In this case, Smithfield Foods acquired Carroll's Foods for its hog-growing facilities, which is a part of its supply chain for pork processing.

Question 3

An attempt to explain that vertical integration is more efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market becomes too great has been proposed by

Accepted Answer

The proposal that vertical integration is more efficient than contracting for goods and services in the marketplace when the transaction costs of buying goods on the open market becomes too great is based on transaction cost economics. This theory suggests that firms will choose to vertically integrate when the cost of using the market exceeds the cost of internal production.

Question 4

The most logical growth strategy for a corporation with current product lines with real growth potential in a growing industry is

Accepted Answer

Concentration focuses on expanding or improving existing product lines, which is most logical for a corporation with products that have real growth potential in a growing industry. This strategy allows the company to leverage its existing strengths and market knowledge to capitalize on growth opportunities.

Question 5

Which kind of corporate strategy deals with the firm's overall orientation toward growth?

Accepted Answer

Directional strategy deals with the firm's overall orientation toward growth, including expanding operations, diversification, and downsizing to improve performance. Portfolio strategy involves managing the company's portfolio of businesses, parenting strategy deals with the management of a set of businesses by a corporate parent, cooperative strategy involves collaborations with other firms, and functional strategy deals with specific functional areas within the firm.

Question 6

The purpose of vertical growth is to

Accepted Answer

Vertical growth involves a company expanding its operations into areas that are at different points along the same production path, such as taking over functions previously handled by suppliers or distributors. This can help the company control more aspects of its supply chain, reduce costs, and increase efficiency.

Question 7

Which one of the following directional strategies is most frequently used in corporations?

Accepted Answer

Growth is the most frequently used directional strategy in corporations as it involves expanding the business through various means such as increasing market share, introducing new products or services, entering new geographical markets, and strategic partnerships or alliances. This strategy is adopted to increase revenue, profits, and market power. Other strategies like stability, consolidation, retrenchment, and expansion are used relatively less frequently.

Question 8

A disadvantage of vertical integration is that it

Accepted Answer

Vertical integration can create exit barriers because it involves significant investment in assets specific to a particular business or industry, making it difficult and costly to exit those operations.

Question 9

Which external growth strategy was demonstrated when Procter & Gamble completely absorbed Gillette?

Accepted Answer

Acquisition is the external growth strategy demonstrated when Procter & Gamble completely absorbed Gillette. Acquisition involves one company completely taking over the ownership and management of another company.

Question 10

Which kind of corporate strategy deals with the manner in which the firm coordinates activities and builds corporate synergies through resource sharing and development?

Accepted Answer

Parenting strategy deals with the coordination and building of corporate synergies through resource sharing and development. It involves how a parent company manages its portfolio of businesses and how it adds value to them through the sharing of resources and capabilities.

Question 11

Which external growth strategy involves two or more corporations joining in a stock exchange and from which only one corporation survives?

Accepted Answer

A merger involves two or more corporations joining together to form a new corporation. In some cases, the merger may result in the disappearance of one of the original corporations, as the surviving corporation absorbs the other(s). This can happen, for example, if one of the corporations is struggling financially, or if the two corporations have similar business models and are competing for the same market share.

Question 12

In many cases,________ integration is more profitable than ________ integration.

Accepted Answer

Backward integration involves acquiring businesses that supply materials, components, or services to the acquiring company's core business. This can lead to cost savings, control over the supply chain, and improved efficiency. Forward integration involves acquiring businesses that distribute or sell the acquiring company's products or services. While this can increase control over distribution and potentially increase profit margins, it is often less profitable than backward integration. Therefore, backward integration is more profitable than forward integration in many cases.

Question 13

Which of the following is not a reason why the growth strategy is so desirable?

Accepted Answer

The answer of Which of the following is not a...

Question 14

The ability for Nike to manufacture its own shoes and then build stores for distribution is an example of

Accepted Answer

Forward integration refers to a company's ability to control the distribution and sale of its products, moving forward in the supply chain. Nike's ability to manufacture its own shoes and then distribute them through its own stores is an example of forward integration.

Question 15

Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio.

Accepted Answer

This statement is true. Corporate strategy involves making decisions about the direction and scope of a company's activities in order to achieve its long-term goals and objectives. This includes managing the organization's portfolio of businesses and products, as well as determining how to allocate resources and prioritize strategic initiatives.

Question 16

Ford Motor Company's use of company resources to build its River Rouge Plant outside of Detroit so that iron ore could enter into one end of the plant and a finished automobile could exit out of the other end is called

Accepted Answer

Ford Motor Company's use of company resources to build its River Rouge Plant outside of Detroit so that iron ore could enter into one end of the plant and a finished automobile could exit out of the other end is an example of vertical growth, also known as vertical integration. Vertical integration occurs when a company expands its operations to control the entire supply chain of its product, from the raw materials to the finished product.

Question 17

Corporate parenting is the coordination of cash flow among units.

Accepted Answer

Corporate parenting refers to the management and strategic oversight provided by a corporate entity to its subsidiary companies, which includes activities such as setting overall strategic direction, providing resources and support, and exploring synergies among subsidiaries. While cash flow coordination may be a component of this, it is not the sole definition of corporate parenting.

Question 18

Vertical integration is going backward on an industry's value chain.

Accepted Answer

Vertical integration refers to a company expanding its operations either backward towards the raw materials (backward integration) or forward towards the end consumer (forward integration) in its industry's value chain.

Question 19

Which strategy specifies the firm's overall direction in terms of its general orientation toward growth,the industries or markets in which it competes,and the manner in which it coordinates activities and transfers resources among business units?

Accepted Answer

The corporate strategy refers to the overall direction of the firm in terms of growth, industries/markets it competes in and resource allocation between business units. It sets the framework for decision-making at higher levels in the organization. Functional strategy relates to specific functional areas such as marketing, operations or finance. Divisional strategy pertains to the direction of each individual business unit within the company. Organizational strategy encompasses the structure and design of the organization. Business strategy is concerned with how the firm competes in particular markets or industries.

Question 20

What are the three key issues that corporate strategy addresses?

Accepted Answer

The answer of What are the three key issues that...

Quiz 7: Strategy Formulation: Corporate Strategy