Strategic Management Quiz Over Chap. 5&6

Front 1

The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.

Back 1

False

Front 2

Horizontal integration is seeking ownership or increased control over competitors.

Back 2

True

Front 3

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

Back 3

True

Front 4

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.

Back 4

True

Front 5

A strategy of seeking ownership or increased control of a firm’s supplier is backward integration

Back 5

True

Front 6

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 Backward integration strategy.

Back 6

True

Front 7

1. Market development includes introducing present products into new geographic areas.

Back 7

True

Front 8

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

Back 8

True

Front 9

The related diversification strategy is effective when an organization has a weak management team.

Back 9

False

Front 10

AT&T’s acquisition of BellSouth in 2007 was the largest telecommunications acquisition ever approved in the U.S.

Back 10

True

Front 11

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.

Back 11

True

Front 12

Morgan Stanley’s building of a casino in Atlantic City is a good example of related diversification.

Back 12

True

Front 13

All of the following are important factors in the Balanced Scorecard except:
a. customer service.
b. employee morale.
c. product quality.
d. business ethics.
e. stockholder equity.

Back 13

e. stockholder equity.

Front 14

Southwest Airlines selling tickets through Galileo is an example of which type of strategy?
a. forward integration
b. backward integration
c. horizontal integration
d. related diversification
e. unrelated diversification

Back 14

a. forward integration

Front 15

Whirlpool selling its struggling Hover floor-care business to Techtronic Industries is an example of which type of strategy?
a. related diversification
b. unrelated diversification
c. retrenchment
d. divestiture
e. liquidation

Back 15

d. divestiture

Front 16

Burger King opening its first restaurant in Japan is an example of which type of strategy?
a. forward integration
b. backward integration
c. horizontal integration.
d. market development
e. product development

Back 16

d. market development

Front 17

Web sites to sell products directly to consumers are examples of which type of strategy?
a. backward integration
b. product development
c. forward integration
d. horizontal integration
e. conglomerate diversification

Back 17

c. forward integration

Front 18

In which situation would horizontal integration be an especially effective strategy?
a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.
b. When an organization competes in a slowing industry.
c. When decreased economies of scale provide major competitive advantages.
d. When an organization has neither the capital nor human talent needed to successfully manage an expanded organization.
e. When competitors are succeeding due to managerial expertise or having particular resources an organization possesses.

Back 18

a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.

Front 19

When a domestic company first begins to export to India, it is an example of
a. horizontal integration.
b. backward integration.
c. forward integration.
d. concentric diversification.
e. market development.

Back 19

e. market development.

Front 20

Nortel cutting another 2,900 jobs in 2007 in an attempt to stay in business would be an example of:
a. divestiture.
b. backward integration.
c. liquidation.
d. retrenchment.
e. forward integration.

Back 20

d. retrenchment.

Front 21

What kind of strategy is retrenchment?
a. A turnaround or reorganization strategy
b.An expansion strategy
c. A conglomerate strategy
d. An intensive strategy
e. An offensive strategy

Back 21

a. A turnaround or reorganization strategy

Front 22

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.

Back 22

True (Chapter 6)

Front 23

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

Back 23

True (Chapter 6)

Front 24

In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.

Back 24

True (Chapter 6)

Front 25

Cash cows represent the organization’s best long-run opportunities for growth and profitability.

Back 25

False (Chapter 6)

Front 26

The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization’s various divisions.

Back 26

True (Chapter 6)

Front 27

Viewing businesses as star, cash cow, dog or question mark is an oversimplification.

Back 27

True (Chapter 6)

Front 28

Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm.

Back 28

True (Chapter 6)

Front 29

Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages.

Back 29

True (Chapter 6)

Front 30

Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.

Back 30

True (Chapter 6)

Front 31

The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most boards and has shifted power from CEOs to directors.

Back 31

True (Chapter 6)

Front 32

What type of strategy would divestiture be classified as?
a. Aggressive
b. Defensive
c. Competitive
d. Offensive
e. Conservative

Back 32

b. Defensive (Chapter 6)

Front 33

For what type of company is the BCG Matrix ideal for analyzing?
a. Companies with more than one division
b. All companies
c. Companies with annual sales greater than $1 million
d. Companies with annual sales of less than $1 million
e. Large companies

Back 33

a. Companies with more than one division (Chapter 6)

Front 34

In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage terms?
a. x-axis
b. y-axis
c. first quadrant
d. second quadrant
e. third quadrant

Back 34

b. y-axis (Chapter 6)

Front 35

How would a division with a low relative market share position in a high growth industry be described?
a. question mark
b. cash cow
c. star
d. stuck-in-the-middle
e. dog

Back 35

a. question mark (Chapter 6)

Front 36

Which strategy would be most appropriate for a company classified as a Dog?
a. market penetration
b. market development
c. product development
d. retrenchment
e. forward integration

Back 36

d. retrenchment (Chapter 6)

Front 37

According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position?
a. Market penetration
b. Conglomerate diversification
c. Joint venture
d. Retrenchment
e. Liquidation

Back 37

a. Market penetration (Chapter 6)

Front 38

The act of oversight and direction for an organization is referred to as
a. corporate lawmaking.
b. centralized control.
c. organizational direction.
d. establishing norms.
e. governance.

Back 38

e. governance. (Chapter 6)

Front 39

All of the following are principles of good organizational governance, as established by Business Week, except:
a. No directors do business with the company or accept consulting or legal fees from the firm.
b. The audit, compensation and nominating committees are made up solely of outside c. directors.
c. Each director owns a large equity stake in the company, excluding stock options.
d. At least two directors are current or former company executives.
e. The CEO is not also the Chairperson of the Board.

Back 39

d. At least two directors are current or former company executives. (Chapter 6)