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mgmt464 t3 ch7

The most widely pursued corporate directional strategies are those designed to achieve growth (TF)
true
With taper integration, a firm internally makes 100% of its key supplies and completely control its distributors (TF)
false
As defined by the text, synergy is the concept
that two firms can generate more profits together than separately
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?
corporate
The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position (TF)
true
Which strategy involves giving up management of the firms to the courts in return for some settlement of the corporations obligations?
bankruptcy
Products that typically bring in far more money than is needed for maintenance of their market share are called
cash cows
The most logical growth strategy for a corporation having a strong competitive position possessing a high market share in a highly attractive industry is
concentration
Corporate parenting views the corporations in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units (TF)
true
Which one of the following directional strategies is most frequently used in corporations?
growth
When Bristol-Myers Squibb purchased 17% os ImClone’s common stock to gain access to a new drug, it was using which type of integration?
quasi integration
The two basic growth strategies are concentration and strategic alliances (TF)
false
When a firm internally makes 100% of its key supplies and completely controls its distributors, this is known as
full integration
Adding a related or complementary product to a corporation’s business units is called
concentric diversification
Which of the following is NOT a reason why the growth strategy is so seductive?
a large and growing firm attracts more acquisition offers
Forming a joint venture between a foreign corporation and a domestic company is the most popular strategy used to enter a new country (TF)
true
The strategy which takes place in two basic phases of contraction and consolidation is
turnaround
The stability strategies are really a lack of any strategy (TF)
false
Management contracts are used in International dealings
when an MNC has a large amount of management talent available and chooses to use its personnel to assist a firm in a host country for a specifies fee and period of time
Stability strategies can be very useful in the short run, but they can be dangerous if followed for too long (TF)
true
According to the BCG Growth-Share Matrix, market leaders that typically are at the peak of their product life cycle and are usually able to generate enough cash to maintain their high share of the market are called
stars
Management contracts are common when a host government expropriates part or all of a foreign-owned company’s holdings in its country (TF)
true
An MNC uses which international strategy for entering a foreign market by associating itself with a firm in the host country or a government agency in that country to combine resources and expertise needed for the development of a new product or technologies?
joint ventures
According to the BCG Growth Share Matrix, dogs should be either sold off or managed carefully for the small amounts of cash they can generate (TF)
true
Which strategy did Delta choose when it acquired Northwest Airlines to obtain access to Northwest’s Asian Markets?
a horizontal integration strategy
A disadvantage of vertical integration is that it
creates exit barriers
In multipoint competition, large multi-business corporations compete against other large multi-business firms in a number of markets (TF)
true
When Sony’s CEO, Howard Stringer, eliminated 10,000 jobs and closed 11 plants, he was addressed the consolidation phase of the turnaround strategy (TF)
false
Conglomerate diversification is diversifying into an industry unrelated to its current one (TF)
true
The stability strategy is appropriate for all the following circumstances EXCEPT
appropriate when the industry is in decline
In international dealing, green-feild development is
when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire its workforce
Which strategy might be the most likely when management realizes that the current industry is unattractive and that the firm lacks outstanding skills that it could easily transfer to related products or services in other industries?
conglomerate diversification
According to the BCG Growth Share Matrix, those products with low market share that do NOT have the potential to bring in much cash are called
dogs
Forward integration is often more profitable than backward integration (TF)
false
Which of the following describes a turnaround strategy?
emphasizes improving operational efficiency and is appropriate when a corporation’s problems are pervasive, but not yet critical
In which strategy does management hope that another company will have the necessary resources and determination to return the company to profitability?
sell out
The most widely pursued corporate directional strategies are those designed to achieve growth (TF)
true
Corporate parenting is the coordination of cash flow among units (TF)
false
Management contracts are common when a host governments expropriates are part or all of a foreign-owned company’s holdings in its country (TF)
true
Vertical integration is going backward on an industry value chain (TF)
false
Concentric diversification is growth into unrelated businesses (TF)
false
Corporate parenting views the corporation in terms of resources and capabilities that can be used to build business unit values as well as generate synergies across business units (TF)
true
In multipoint competition, large-multi business corporations compete against other large multi-business firms in a number of markets (TF)
true
The two basic growth strategies are concentration and strategic alliances (TF)
false
Vertical integration is the degree to which a firm operates vertically in multiple locations on an industry’s value chain from extracting raw materials to manufacturing to retailing (TF)
true
Which of the following is NOT a reason why the growth strategy is so seductive?
a large and growing firm attracts more acquisition offers
Forward integration is often more profitable than backward integration (TF)
false
As defined by the text, synergy is the concept
that two firms can generate more profits together than separately
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 it called
vertical growth
A long-term contract is considered vertical integration (TF)
false
Exporting grants rights to another company to open a retail store using the franchisers name and operating system (TF)
false
Conglomerate diversification is diversifying into an industry unrelated to its current one (TF)
true
Which external growth strategy involves two or more corporations joining in a stock exchange and from which only one corporation survives?
mergers
Forward integration is often more profitable than backward integration (TF)
false
Forming a joint venture between a foreign corporation and a domestic company is that most popular strategy used to enter a new country (TF)
true
Research comparing concentric with conglomerate diversification concluded that
the relationship between relatedness and performance is curvilinear
The GE Business Screen is based on long-term industry attractiveness and business strength/competitive position (TF)
true
The purchase of Carroll’s Foods for its hog-growing facilities by Smithfield Foods, the world’s largest port processor, is an example of
backward integration
An MNC uses which international strategy for entering a foreign market by purchasing another company already operating in the area developing synergistic benefits gained from acquiring strong complementary product lines and a good distribution network?
acquisition
In the Boston Consulting Group’s Growth-Share Matrix, the relative competitive position of a product, division, or corporation is defined as
its market share divided by that of the largest other competitor
An MNC uses which international strategy for entering a foreign market by combining the higher labor skills and technology available in the developed countries with the lower cost labor available in the developing country?
production sharing
Corporate parenting is the coordination of cash flow among units. (TF)
false
A relatively quick way to move into an international area is through Greenfield development (TF)
false
In international dealings, green-feild development is
when a corporation chooses to build a facility from scratch allowing it the freedom to design the plant, choose suppliers, and hire its workers
A firm’s expansion into other geographic locations and/or increasing the range of products and services to current markets is called
horizontal growth
An attempt to explain that vertical integration is more efficient than contraction for good and services in the marketplace when the transaction costs of buying good on the open market becomes too great has been proposed by
transaction cost economies
Turnkey operations are typically contracts for the construction of operating facilites in exchange for a fee (TF)
true
The purpose of vertical growth is to
take over a function previously provided by a supplier of by a distributor
Horizontal growth can be achieved by expanding the firm’s products into other geographic locations and/or by increasing the range of products and service offered to current markets (TF)
true
With taper integration, a firm internally makes 100% of its key suppliers and completely controls its distributors (TF)
false
In many cases,____ integration is more profitable than _____ integration.
backward, forward
When a firm internally makes 100% of its key suppliers and completely controls its distributors, this is known as
full integration
Which strategy is most appropriate as a temporary strategy to enable a corporation to consolidate its resources after prolonged rapid growth in an industry now facing an uncertain future?
pause/proceed with cation strategy
An MNC uses which international strategy for entering a foreign market by simple shipping goods produced in the company’s home country to other countries for marketing to minimize risk and to experiment with a specific product?
exporting
Corporate parenting views the corporation in terms of resources and capabilities that can be used to build business unit value as well as generate synergies across business units (TF)
true
Turnkey operations are typically contacts for the construction of operating facilities in exchange for a fee (TF)
true
Which strategy is most appropriate for a company in an industry in which the future is expected to continue as an extensions of the present?
no change strategy
In terms of diversification strategies, research suggests that the relationship between relatedness and performance is curvilinear in the shape of an inverted U-shape curve (TF)
true
One disadvantage of portfolio analysis is that is provides an illusion of scientific rigor (TF)
true
According to the GE Business Screen, the competitive strength of a product is based only on its market share (TF)
false
Which one of the following is NOT a characteristic of a firm that has chosen a captive company strategy?
probably most appropriate for a company with a strong competitive position in a growing industry
Growth through diversification out of an industry into an unrelated industry is called
conglomerate diversification
Stability strategies can be very useful in the short run, but they can be dangerous if followed for too long (TF)
true
Which kind of corporate strategy deals with the firm’s overall orientation toward growth?
directional strategy
Corporate strategy deals primarily with the choice of direction for the firm as a whole and the management of its business or product portfolio (TF)
true
With conglomerate diversification, the focus is on
financial considerations
BP Amoco and Royal Dutch Shell are examples of fully integrates firms because they make 100% of their key suppliers and completely control their distributions (TF)
true
The growth-share matrix of the Boston Consulting Group suggests that the excess cash being generated by “cash cows” should be used to fund
“question marks”
What strategy did Circuit City use in 2008 when it converted its retail stores to cash?
liquidation
The controversy surrounding external versus internal growth finds
internal growth appears to be superior financially to external growth
The strategy which takes place in two basic phases of concentration and consolidation is
turnaround
Forward integration is often more profitable than backwards integration (TF)
false
Management contracts are common when a host government expropriates part or all of a foreign-owned company’s holdings in its country (TF)
true
Concentric diversification is growth into unrelated businesses (TF)
false
Which kind of corporate strategy deals with the manner in which the firm coordinates activities and transfers resources and cultivates capabilities among product lines and business units
parenting strategy
Which of the following describes a turnaround strategy?
emphasizes improving operational efficiency and is appropriate when a corporations’ problems are pervasive, but not yet critical
Which external growth strategy was demonstrated when Proctor and Gamble completely absorbed Gillette?
acqusitions
One of the most popular aids to developing corporate strategy in multi-business corporations that view business units in terms of the cash they generate is called
portfolio analysis
One benefit of a US company entering a joint venture with an international firm is that it
reduces the risk of expropriation

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