Test 3

Question 1

A true leader Has a _____ level of product differentiation and _____ market segmentation

Answer 1

Low ; low

Question 2

A disadvantage of pursuing a cost leadership strategy is that

Answer 2

A technological change can make experience curve economics obsolete

Question 3

A large company produces a variety of clothing for different customer groups. This firm is pursuing what strategy?

Answer 3

Differentiation

Question 4

The most expensive competitive strategy to pursue is?

Answer 4

Differentiation

Question 5

What best describes an industry that consists of many small firms?

Answer 5

Fragmented

Question 6

One strategy used to consolidate fragmented industries is

Answer 6

Horizontal merger

Question 7

To compete in the fragmented restaurant industry, red lobster corporation built and operated hundreds of restaurants across United States and Canada. red lobster is using which type of strategy?

Answer 7

Chaining

Question 8

What refers to the process by which companies increase or decrease product prices to convey their competitive intention to other companies and so influence the way they price their products?

Answer 8

Price signaling

Question 9

What refers to the process by which one company informally takes the responsibility for setting industry prices?

Answer 9

Price leadership

Question 10

A telecommunications firm is working on the next generation of switching equipment that allows calls to be digitally transmitted from sender to receiver. If the new product will be sold to existing customers, the firm is pursuing a strategy of…

Answer 10

Product development

Question 11

A Japanese automaker begins selling its compact cars in Southeast Asia. He firm is pursuing a strategy of…

Answer 11

Market development

Question 12

What are the strategies used in declining industries

Answer 12

Leadership
niche
Divestment
Harvest

Question 13

If a firm had the resources to surface stable pocket of demand in a declining industry, then it should pursue a ______ strategy

Answer 13

Niche

Question 14

Global expansion

Answer 14

Can enable companies to increase their profitability and grow their profits more rapidly

Question 15

What are the ways in which expanding globally can enable companies to increase the profitability and grow their profits more rapidly

Answer 15

Locating in foreign countries with significant trade barriers

Question 16

When a company increases its growth rate by taking goods or services developed at home and selling them internationally it is

Answer 16

Leveraging its existing products

Question 17

Responding to pressures for cost reductions require that a company try to minimize its ______

Answer 17

Unit costs

Question 18

What factor increases pressures for local responsiveness?

Answer 18

Differences in customer tastes and preferences

Question 19

When toy maker Mattel sells Barbie dolls in the Middle East, it changes the doll’s shape to one that is more accurate portrayal of the female body. Mattel does this in order to….

Answer 19

Respond to differences in local tastes

Question 20

A company with a business-level strategy of cost leadership should pursue what global expansion strategy?

Answer 20

Global standardization

Question 21

A localization strategy is most appropriate in an industry in which pressures for cost reductions are _________ and pressures for local responsiveness are _________.

Answer 21

low; high

Question 22

A localization strategy is based on which of the following ideas?

Answer 22

Consumer tastes and preferences differ among national markets.

Question 23

What factors are consistent for a company pursuing a transnational strategy

Answer 23

a. achieve low costs.
b. differentiate the product offering across geographic markets.
d. foster a flow of skills.
e. focus on leveraging subsidiary skills.

Question 24

What strategy should a company pursue if it has high pressures for cost reductions and low pressures for local responsiveness?

Answer 24

International strategies

Question 25

What are the drawbacks to licensing?

Answer 25

a. A company does not have tight control over operations in foreign countries.
b. Licensing limits a company’s ability to coordinate strategy.
c. A company may lose control of technological know-how.

Question 26

Which entry mode gives a multinational the tightest control over foreign operations?

Answer 26

Setting up a wholly owned subsidiary

Question 27

What entry mode is generally the most costly method of serving a foreign market?

Answer 27

Wholly owned subsidiaries

Question 28

Managers who pursue _______________ have decided the best way to increase company profits is to purchase the resources and assets of industry competitors.

Answer 28

Horizontal integration

Question 29

A global standardization strategy is most appropriate in an industry in which pressures for cost reductions are ____________ and pressures for local responsiveness are ___________.

Answer 29

High ; low

Question 30

Adam’s boss tells him that their company is pursuing a strategy of horizontal integration. Which of the following should Adam expect?

Answer 30

His company will buy one of its rivals

Question 31

A merger is an agreement between _________________ companies to pool their operations and create a new business entity.

Answer 31

Two

Question 32

Antitrust regulation

Answer 32

is concerned with companies’ abuse of their market power to raise prices for consumers above the level that would exist in more competitive situations

Question 33

Outsourcing occurs when a firm

Answer 33

hires another firm to perform value-creation activities on its behalf.

Question 34

Outsourcing

Answer 34

moves some value chain activities outside the firm

Question 35

When an intermediate manufacturer moves into final assembly, it is pursuing

Answer 35

Forward vertical integration

Question 36

The strategy of ___________ involves choosing the value-added stages of the raw-material-to-consumer chain in which to compete.

Answer 36

Vertical integration

Question 37

___________ refers to the process of entering new industries, distinct from a company’s core industry

Answer 37

Diversification

Question 38

When a company is generating financial resources in excess of the amount needed to maintain a competitive advantage in its core business, it will most likely pursue

Answer 38

Diversification

Question 39

__________ arise when one or more of a diversified company’s business unites are able to realize cost-saving or differentiation advantages because they can share resources or capabilities

Answer 39

Economies of scope

Question 40

When one or more components of a company’s value chain are applicable to a wide variety of industrial and commercial situations, which of the following strategies should a company pursue?

Answer 40

Related diversification

Question 41

____________ refers to the process of companies divesting themselves of diversified activities and downsizing in order to concentrate on fewer businesses.

Answer 41

Restructuring

Question 42

_____________ refers to the fact that the stock of highly diversified companies is valued lower, relative to their earnings, than the stock of less diversified enterprises

Answer 42

Diversification discount

Question 43

_________________ involves halting investment in a unit in order to maximize short-to-medium-term cash flow from that unit.
Select one:

Answer 43

Harvest strategy

Question 44

What are the generic competitive strategies

Answer 44

Cost leadership
Differentiation
Focused cost leadership
Focused differentiation