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CH 1 Study Quiz master 1. (p.

8) According to the text, the strategic management process entails three ongoing processes: A. analyses, actions, and synthesis. B. analyses, decisions, and actions. C. analyses, evaluation, and critique. D. analyses, synthesis, and antithesis.

2. (p. 9) The four key attributes of strategic management include the idea that
A. strategy must be directed toward overall organizational goals and objectives. B. strategy must be focused on long-term objectives. C. strategy must be focused on one specific area of an organization. D. strategy must focus on competitor strengths. 3. (p. 9) The four key attributes of strategic management include all of the following EXCEPT: A. including multiple stakeholder interests in decision making. B. incorporating both short-term and long-term perspectives. C. recognizing the trade-offs between effectiveness and efficiency. D. emphasis on the attainment of short-term objectives.

4. (p. 10) "Effectiveness" is often defined as


A. doing things right. B. stakeholder satisfaction. C. doing the right thing. D. productivity enhancement.

5. (p. 15) The three participants in corporate governance are


A. the shareholders, board of directors, and employees. B. the shareholders, labor unions, and employees. C. the shareholders, board of directors, and management. D. the shareholders, banks and lending institutions, and management.

6. (p. 15) While working to prioritize and fulfill their responsibilities, members of an organization's
board of directors should A. represent their own interests. B. represent the interests of the shareholders. C. direct all actions of the CEO. D. emphasize the importance of short-term goals.

7. (p. 15) Members of Boards of Directors are


A. appointed by the Securities and Exchange Commission. B. elected by the shareholders as their representatives. C. elected by the public. D. only allowed to serve one term of four years.

8. (p. 16) An organization is responsible to many different entities. In order to meet the demands of
these groups, organizations must participate in stakeholder management. Stakeholder management means that A. interests of the stockholders are not the only interests that matter. B. stakeholders are second in importance to the stockholders.

C. stakeholders and managers inevitably work at cross-purposes. D. all stakeholders receive financial rewards.

9. (p. 17) There are several perspectives of competition. One perspective is zero-sum thinking. Zero-sum
thinking means that A. all parts of the organization gain at no loss. B. in order for someone to gain others must experience no gain or benefit. C. one can only gain at the expense of someone else. D. everyone in the organization shares gains and losses equally. 10. (p. 21) Firms must be aware of goals other than short-term profit maximization. One area of concern should be social responsibility which is A. the expectation that business will strive to improve the overall welfare of society. B. the idea that organizations are solely responsible to local citizens. C. the fact that court costs could impact the financial bottom line. D. the idea that businesses are responsible to maintain a healthy social climate for their employees. 11. (p. 23) According to the text, the "triple bottom line" approach to corporate accounting includes three components: A. financial, environmental, and customer. B. financial, organizational, and customer. C. financial, environmental, and social. D. financial, organizational, and psychological. 12. (p. 25) Strategy formulation and implementation is a challenging ongoing process. To be effective, it should involve A. the CEO and the board of directors. B. the board of directors, CEO, and CFO. C. line and staff managers. D. all of these. 13. (p. 25) Leadership is a necessary (but not sufficient) condition for organizational success. Leaders should emerge at which level(s) of an organization? A. only at the top B. in the middle C. throughout the organization D. only during times of change 14. (p. 26) The hierarchy of organizational goals is in this order (least specific to most specific): A. vision statements, strategic objectives, mission statements. B. mission statements, strategic objectives, vision statements. C. vision statements, mission statements, strategic objectives. D. mission statements, vision statements, strategic objectives. 15. (p. 26) Vision statements are used to create a better understanding of the organization's overall purpose and direction. Vision statements A. are very specific. B. provide specific objectives. C. set organizational structure.

D. evoke powerful and compelling mental images. 16. (p. 26) Effective vision statements include A. all strategic directions of the organization. B. a brief statement of the company's direction. C. strategic posturing and future objectives D. financial objectives and projected figures. 17. (p. 28) Examples of __________ include: "To be the happiest place on earth" (Disneyland), and "Restoring patients to full life" (Medtronic). A. vision statements B. mission statements C. strategic objectives D. operational objectives 18. (p. 28-29) WellPoint Health Network states: "WellPoint will redefine our industry: through a new generation of consumer-friendly products that put individuals back in control of their future." This is an example of a A. strategic objective. B. vision statement. C. vague statement of direction. D. line manager's individual goal.

19. (p. 29) In contrast to an organization's vision, its mission should


A. be shorter in length. B. encompass both the purpose of the company as well as the basis of competition. C. encompass all the major rules and regulations of the corporate work force. D. be less detailed. 20. (p. 30) An organization's mission statement and vision statement set the overall direction of the organization. Strategic objectives A. operationalize the mission statement. B. modify the mission statement. C. are a shorter version of the mission statement. D. are only clarified by the board of directors. 21. (p. 30) Fortune Brands states they will "cut corporate overhead costs by $30 million a year." This is an example of a A. nonfinancial strategic objective. B. financial strategic objective. C. vision statement. D. mission statement. 22. (p. 32) In large organizations, conflicts can arise between functional areas. In order to resolve these conflicts, strategic objectives A. put financial objectives above human considerations. B. align departments toward departmental goals. C. help resolve conflicts through their common purpose. D. cause debate and increase conflict.

CH 2 1. 38. (p. 42) _____________ tracks the evolution of environmental trends, sequences of events, or streams of activities. A. Environmental scanning B. Environmental monitoring C. Environmental surveying D. Competitive intelligence 2.39. (p. 41) Scanning the general environment would identify information on A. substitute goods. B. the aging population and ethnic shifts. C. customer and firm bargaining power. D. competitive rivalry. 3.40. (p. 42) Gathering "competitive intelligence" A. is good business practice. B. is illegal. C. is considered unethical. D. minimizes the need to obtain information in the public domain.

4. 42. (p. 45) A danger of forecasting discussed in the text is that 4


A. in most cases, the expense of collecting the necessary data exceeds the benefit. B. forecasting's retrospective nature provides little information about the future. C. managers may view uncertainty as "black and white" while ignoring important "gray areas." D. it can create legal problems for the firm if regulators discover the company is making forecasts.

5. 43. (p. 47) The aging of the population, changes in ethnic composition, and effects of the baby boom
are A. macroeconomic changes. B. demographic changes. C. global changes. D. sociocultural changes.

6. 44. (p. 49) Increasingly larger numbers of women entering the work force since the early 1970s is an
example of A. demographic changes. C. sociocultural changes. B. political and legal environmental changes. D. technological developments.

7. 45. (p. 49-50) Emerging sociocultural changes in the environment include

A. changes in the ethnic composition. B. the increasing educational attainment of women in the past decade. C. progressively less disposable income by consumers. D. changes in the geographic distribution of the population.

8. 47. (p. 47) Which of the following would be considered part of a firm's general environment?
A. Decreased entry barriers. B. Higher unemployment rates. C. Increased bargaining power of the firm's suppliers. D. Increased competitive intensity.

9. 49. (p. 51) To illustrate interrelationships among different segments of the general environment: The
persistence of large U.S. trade deficits (__________) has led to greater demand for protectionist measures, such as trade barriers and quotas (__________). These measures lead to higher prices for U.S. consumers and fuel inflation (__________). A. macroeconomic, sociocultural, political/legal B. macroeconomic, political/legal, economic C. macroeconomic, technological, economic D. macroeconomic, global, economic

10. 50. (p. 55) Which is considered a force in the "Five-Forces" model?
A. Increased deregulation in an industry. B. The threat of government intervention. C. Rivalry among competing firms. D. Recent technological innovation.

11. 52. (p. 56) The threat of new entrants is high when there are
A. low economies of scale. B. high capital requirements. C. high switching costs. D. high differentiation among competitors' products and services.

12. 53. (p. 56) Product differentiation by incumbents act as an entry barrier because
A. new entrants cannot differentiate their products. B. incumbents will take legal action if new entrants do not differentiate their products. C. new entrants will have to spend heavily to overcome existing customer loyalties. D. it helps a firm to derive greater economies of scale.

13. 54. (p. 56) Which of the following would be an entry barrier?
/0A. large economies of scale D. low capital requirements B. low switching costs C. easy access to raw materials

14. 55. (p. 55) A large fabricator of building components purchased a steel company to provide raw
materials for its production process. This is an example of A. backward integration. B. economies of scale. C. forward integration. D. product differentiation.

15. 56. (p. 57) The bargaining power of the buyer is greater than that of the supplier when
A. volume of purchase is low. B. threat of backward integration by buyers is low. C. cost savings from the supplier's product are minimal. D. the buyer's profit margin is low.

16. 57. (p. 57) Buyer power will be greater when

A. the products purchased are highly differentiated. B. there are high switching costs. C. the industry's product is very important to the quality of the buyer's end products or services. D. it is concentrated or purchases large volumes relative to seller sales.

17. 58. (p. 58-59) The bargaining power of suppliers increases as


A. more suppliers enter the market. B. importance of buyers to supplier group increases. C. switching costs for buyers decrease. D. threat of forward integration by suppliers increases. 18. 59. (p. 55) An independent group of suppliers, such as farmers, gather to form a cooperative to sell their products to buyers directly, replacing their former distributor. This is an example of A. threat of entry. B. backward integration. C. forward integration. D. threat of substitute products.

19. 61. (p. 58-59) In Porter's Five-Forces model, conditions under which a supplier group can be
powerful include all the following EXCEPT A. lack of importance of the buyer to the supplier group. B. high differentiation by the supplier. C. dominance by a few suppliers. D. readily available substitute products.

20. 65. (p. 59-60) The most intense rivalry results from
A. numerous equally balanced competitors, slow industry growth, high fixed or storage costs. B. few competitors, slow industry growth, lack of differentiation, high fixed or storage costs. C. numerous equally balanced competitors, manufacturing capacity increases only in large increments, low exit barriers. D. a high level of differentiation. 21. 66. (p. 60) Exit barriers arise from A. specialized assets with no alternative use. B. governmental and social pressures. C. strategic interrelationships with other business units within the same company. D. all of these. 22. 68. (p. 63) End users are A. the final consumers in a distribution channel. B. usually the C in B2C. C. likely to have greater bargaining power because of the Internet. D. all of these. 23. 71. (p. 64) In general, the threat of substitutes is heightened because the Internet A. introduces new ways to accomplish the same task. B. lowers switching costs. C. lowers barriers to entry. D. increases output per unit of cost. 24. 72. (p. 65) How do infomediaries and consumer information websites increase the intensity of competitive rivalry? A. by shifting customers away from issues of price B. by making competitors in cyberspace seem less equally balanced C. by consolidating the marketing message that consumers use to make a purchase decision to a few key pieces of information that the selling company has little control over D. by highlighting a firm's unique sellinadvantages

CH3 Chapter 03 - Assessing the Internal Environment of the Firm Chapter 03 Assessing the Internal Environment of the Firm 1. (p. 81, 86) In value-chain analysis, the activities of an organization are divided into two major categories of value activities: primary and support. Which of the following is a primary activity? A. Purchasing key inputs. B. Recruiting and training employees. C. Repairing the product for the consumer. D. Monitoring the cost of producing the product through a cost accounting system. 2. (p. 83) Inbound logistics include A. machining and packaging. B. warehousing and inventory control. C. repair and parts supply. D. promotion and packaging.

3. (p. 81, 83-85) Advertising is a __________ activity. Supply of replacement parts is a __________ activity.
A. primary; primary B. support; primary C. support; secondary D. primary; support

4. (p. 83) Which of the following is not an advantage of Just-In-Time inventory systems?
A. Reduced raw material storage costs. B. Minimized idle production facilities and workers.

C. Reduced work-in-process inventories. D. Reduced dependence on suppliers.

5. (p. 84) ___________ is/are associated with collecting, storing, and distributing the product or service to
buyers. They consist of warehousing, material handling, delivery operation, order processing, and scheduling. A. Services B. Inbound logistics C. Outbound logistics D. Operations

6. (p. 86) Customer service would include


A. product promotion. B.product distribution C. parts supply. D. procurement of critical supplies.

7. (p. 86-87) Which of the following is a support activity?


A. Inbound logistics. B. Operations. C. Technology development. D. Customer service.

8. (p. 89) Although general administration is often viewed only as overhead expense, it can become a
source of competitive advantage. Examples include all of the following EXCEPT A. negotiating and maintaining ongoing relations with regulatory bodies. B. effective information systems contributing significantly to a firm's overall cost leadership strategy. C. marketing expertise increasing a firm's revenues and enabling it to enter new markets. D. top management providing a key role in collaborating with important customers.

9. (p. 89) For firm's such as Walgreen Co. (a chain of drugstores), information systems have been a
source of competitive advantage by enabling them to A. differentiate service. B. automate some operations. C. respond to consumer needs. D. all of these.

10. (p. 93-94) The three key types of resources that are central to the resource-based view of the firm's
are A. tangible resources, intangible resources, and organizational structure. B. culture, tangible resources, intangible resources. C. tangible resources, intangible resources, and organizational capabilities. D. tangible resources, intangible resources, and top management.

11. (p. 94) Examples of tangible resources (in the resource-based view of the firm) include:
A. financial resources, human resources, and firm competencies. B. financial resources, physical resources, and the capacity to combine intangible resources. C. financial resources, physical resources, and technological resources. D. outstanding customer service, innovativeness of products, and reputation.

12. (p. 95) __________ are typically embedded in unique routines and practices that have evolved and
accumulated over time - such as trust and effective work teams. A. Tangible resources B. Intangible resources C. Reputational resources capabilities unparalleled success in the wet shaving industry. This is an example of their A. tangible resources. B. intangible resources. C. organizational capabilities. D. strong primary activities. D. Organizational

13. (p. 95) Gillette combines several technologies (e.g., metallurgy, physiology, physics) to attain

14. (p. 95) __________ are the competencies or skills that a firm employs to transform inputs into outputs.
A. Tangible resources B. Intangible resources C. Reputational resources D. Organizational capabilities

15. (p. 98) A crash R&D program by one firm cannot replicate a successful technology developed by
another firm when research findings cumulate. This is an example of A. social complexity. B. path dependency. C. physical uniqueness. D. causal ambiguity.

16. (p. 98) A variety of firm's resources include interpersonal relations among managers in the firm, its
culture, and its reputation with its suppliers and customers. Such competitive advantages are based upon A. social complexity. B. path dependency. C. physical uniqueness. D. tangible resources.

17. (p. 100-101) A resource is valuable and rare but neither difficult to imitate nor without substitutes.
This should enable the firm to attain A. no competitive advantage. B. competitive parity. C. a temporary competitive advantage. D. a sustainable competitive advantage.

18. (p. 105) The best measure of a company's ability to meet imminent financial obligations is known as
the A. current ratio. B. total asset turnover. C. debt ratio. its short-term financial obligations? A. Leverage ratios. B. Profitability ratios. A. detailed and complex B. fast but comprehensive C. simple and routine D. long-term financial 21. (p. 108) The "balanced scorecard" developed by Kaplan and Norton helps to integrate A. financial analysis and a firm's reputation. B. intangible resources and operational measures. C. financial analysis and stakeholder perspectives. D. short-term perspectives and strategic positioning. 22. (p. 108) The balanced scorecard enables managers to consider their business from all of the following perspectives EXCEPT A. customer perspective. B. internal perspective. C. innovation and learning perspective. D. ethical perspective. 23. (p. 109) An important implication of the "balanced scorecard" approach is that A. managers need to recognize tradeoffs in stakeholder demands and realize that such demands represent a "zero-sum" game in which one stakeholder will gain only at another's loss. B. the key emphasis on customer satisfaction and financial goals are only a means to that end. C. managers should not look at their job as primarily balancing stakeholder demands; increasing satisfaction among multiple stakeholders can be achieved simultaneously. D. gains in financial performance and customer satisfaction must often come at a cost of employee satisfaction. D. profit margin.

19. (p. 105) Which of these categories of financial ratios is used to measure a company's ability to meet
C. Activity ratios. D. Liquidity ratios.

20. (p. 107) The "balanced scorecard" provides top managers with a __________ view of the business.

24. (p. 116-117) Four Internet-based activities that are enhancing firms' capabilities to use the Internet to
add value include A. outsourcing, problem-solving, bill-paying, and delivery. B. evaluating, bill-paying, customizing, and returning. C. search, rescue, repair, return. D. search, evaluation, problem-solving, and transaction

HTMLImage CHAPTER 4 STUDY QUIZ 1. 39. In the knowledge economy, if a large portion of a firm's value is in intellectual and human assets, the difference between the company's market value and book value should ___________ a company with mostly physical and financial assets. A. be equal to B. be smaller than C. be larger than D. not be correlated with 2. 37. As the competitive environment changes, strategic management must focus on different aspects of the organization. Recently, strategic management has moved from focusing on A. intangible resources to tangible resources. B. tangible resources to intangible resources. C. working capital to fixed capital.

D. fixed capital to working capital. 3. 41. Which of the following firms would you expect to have the highest ratio of market value to book value? A. Union Pacific (railroad) B. Google C. International Paper D. Nucor (steel) 4. 42. Human capital includes A. an individual's capabilities, knowledge, and skills. B. the relationships between people. C. the output from assembly line employees. D. an improved product.

5.. 43. __________ includes creativity and problem solving ability. A. Physical capital B. Human capital C. Social capital D. Emotional capital

6. 44. __________ can be defined as the "network of relationships that individuals have throughout the organization." A. Human capital B. Social capital C. Intellectual capital D. Tacit knowledge 7. 45. Tacit knowledge A. is the same as explicit knowledge. B. is found mostly at the lower levels of the organization. C. can be codified but not reproduced. D. can be accessed only with the consent of the employees because it is in the minds of the employees. 8. 47. Recently, a knowledge worker's loyalty to his or her employing firm has __________ compared to his or her loyalty to his or her profession and colleagues. A. increased B. decreased C. remained the same D. no correlation when 9. 49. Managing a knowledge intensive workforce is very challenging. The best way for a firm to manage its workforce is to

A. retain knowledge workers. B. attract the brightest employees. C. balance efforts in the attraction, selection, and retention of top talent. D. ensure that it pays higher salaries than its rivals.

10. 51. Many companies use referrals by current employees as a source for new hiring and even monetarily reward them for the following reasons: A. it is less expensive than the fees paid to headhunters. B. current employees are normally very careful in recommending someone because their credibility is on the line. C. it is a good test of employee loyalty. D. both because current employees are careful in their recommendations because of their credibility and also because it is less expensive than the fees paid to headhunters. 11. 55. In a 360-degree evaluation and feedback system, __________ rate a person's skill and performance. A. superiors B. direct reports C. colleagues D. all of these 12. 58. The least effective way to retain human capital is A. encouraging employee identification with organizational mission and goals. B. requiring employees to sign agreements that prevent them from working for competitors in the future. C. providing employees with a challenging and stimulating work environment. D. providing employees with financial and nonfinancial rewards and incentives. 13. 60. Many successful firms use internal labor markets. The most important reason they do this is because A. they want to encourage job rotation. B. if an employee is in the same department for too long, he/she would become indispensable. C. they want to keep highly mobile employees motivated and challenged. D. an employee who moves too much can be identified as unreliable and eliminated. 14. 62. Human capital and social capital are vital for superior firm performance. If a firm has strong human capital, the firm may exploit this by building social capital. This can be accomplished through A. encouraging workers to work independently of each other. B. decreasing the interaction of departments within the firm. C. encouraging the sharing of ideas between employees in the firm. D. structuring the firm with clearly defined departmental and employee divisions.

15. 63. In an effort to capture key employees from competitors, firms may attract the symbolic leader of a group within a competing firm and hope others will follow. This has been termed A. the "Columbus effect." B. the "Pied Piper effect." C. strategically competitive hiring. D. knowledge integration.

16. 64. Social capital is a source of strength to many firms. Firms leverage their social capital in an effort to create competitive advantages. A firm's social capital is based on A. an employee's individual abilities. B. the relationships among a firm's employees. C. a firm's allocation of financial resources. D. an individual's knowledge. 17. 68. Advantages of effective social networks for career success include all of the following EXCEPT A. access to private information. B. access to diverse skill sets. C. greater power. D. greater redundancy in knowledge sources. 18. 69. Among the downsides of social capital is/are: A. high social capital may breed "groupthink," i.e., a tendency not to question shared beliefs. B. socialization processes whereby individuals are socialized into the norms and values of the organization may become expensive. C. individuals may become less willing to collaborate on joint projects. D. social capital may both breed "groupthink" and the socialization processes to create it (orientation, training, etc.) can be expensive. 19. . Social capital has many potential benefits. However, according to the text, social capital A. is always beneficial to a firm. B. may or may not be beneficial to a firm. C. usually restricts the productivity of employees. D. always hurts firm performance.

20. 71. The use of information technology (e.g., e-mail) has increased in recent years in many organizations. This has helped to A. communicate information efficiently. B. make more effective use of time in every situation. C. restrict social network growth. D. create smaller social networks. 21. 72. The creation of knowledge assets is typically characterized by A. high upfront costs and subsequent high variable costs. B. high fixed costs and high variable costs.

C. low upfront costs and high variable costs. D. high upfront costs and low variable costs.

22. 74. The management of intellectual property involves all of the following EXCEPT A. patents. B. contracts with confidentiality and noncompete clauses. C. converting explicit knowledge to tacit knowledge. D. copyrights and trademarks.

Chapter 05 - Business-Level Strategy: Creating and Sustaining Competitive Advantages 1. (p. 162-163) Michael Porter's three generic strategies can be depicted on two dimensions: competitive advantage and product life cycle. True / False 2. (p. 161) The primary aim of strategic management at the business level is A. maximizing risk-return tradeoffs through diversification. B. achieving a low cost position. C. maximizing differentiation of products and/or services. D. achieving competitive advantage(s). 3. (p. 164) Primary value chain activities that involve the effective layout of receiving dock operations (inbound logistics) and support value chain activities that include expertise in process engineering (technology development) characterize what generic strategy?

A. differentiation B. overall cost leadership C. differentiation focus D. stuck-in-the-middle 4. (p. 168) Convincing rivals not to enter a price war, protection from customer pressure to lower prices, and the ability to better withstand cost increases from suppliers characterize which type of competitive strategy? A. Overall cost leadership. B. Differentiation. C. Differentiation focus. D. Cost leadership focus. 5. (p. 168-169) Which of the following is a risk (or potential pitfall) of cost leadership? A. Cost cutting may lead to the loss of desirable features. B. Attempts to stay ahead of the competition may lead to gold plating. C. Cost differences increase as the market matures. D. Producers are more able to withstand increases in suppliers' cost. 6. (p. 170) Support value chain activities that involve excellent applications engineering support (technology development) and facilities that promote a positive firm image (firm infrastructure) characterize what generic strategy? A. Differentiation. B. Overall cost leadership. C. Differentiation focus. D. Stuck-in-the middle.

7. (p. 171) A differentiation strategy enables a business to address the five competitive forces by A. lessening competitive rivalry by distinguishing itself. B. having brand-loyal customers become more sensitive to prices. C. increasing economies of scale. D. serving a broader market segment. 8. (p. 172-174) All of the following are potential pitfalls of a differentiation strategy EXCEPT: A. uniqueness that is not valuable. B. too high a price premium. C. all rivals share a common input or raw material. D. perceptions of differentiation may vary between buyers and sellers. 9. (p. 174) A firm following a focus strategy A. must focus on governmental regulations. B. must focus on a market segment or group of segments. C. must focus on the rising cost of inputs.

D. must avoid entering international markets. 10. (p. 175-176) All of the following are potential pitfalls of a focus strategy EXCEPT A. erosion of cost advantages within the narrow segment. B. all rivals share a common input or raw material. C. even product and service offerings that are highly focused are subject to competition from new entrants and from imitation. D. focusers can become too focused to satisfy buyer needs. 11. (p. 177) A __________ can be defined as the total profits in an industry at all points along the industry's value chain. A. profit maximizer B. revenue enhancer C. profit pool D. profit outsourcing 12. (p. 178-179) All of the following are potential pitfalls of an integrated overall low cost and differentiation strategy EXCEPT: A. firms that fail to attain both strategies may end up with neither and become "stuck-inthe-middle." B. targeting too large a market that causes unit costs to increase. C. underestimating the challenges and expenses associated with coordinating valuecreating activities in the extended value chain. D. miscalculating sources of revenue and profit pools in the firm's industry.

13. (p. 183) Which of the following is NOT one of the ways the Internet is lowering transaction costs? A. eliminating supply chain intermediaries B. evaluating employee performance C. minimizing office expenses D. reducing business travel 14. (p. 183) Which of the following methods of implementing a differentiation strategy has been greatly enhanced because of Internet technologies? A. celebrity endorsements B. prestige packaging C. exceptional service D. mass customization 15. (p. 185) One of the reasons the Internet is eroding sustainable competitive advantages is A. incumbent firms are entering market segments that they previously considered to be too small. B. nearly all competitors will have greater access to tools for managing costs making it hard for any one to achieve an advantage.

C. differentiators have been able to preserve the unique advantages that have always been the hallmark of their success. D. firms are ignoring opportunities to offer high-end services in niche markets. 16. (p. 187) In the __________ stage of the industry life cycle, the emphasis on product design is very high, the intensity of competition is low, and the market growth rate is low. A. introduction B. growth C. maturity D. decline 17. (p. 188) In the __________ stage of the industry life cycle, there are many segments, competition is very intense, and the emphasis on process design is high. A. introduction B. growth C. maturity D. decline 18. (p. 189) As markets mature, A. costs continue to increase. B. application for patents increase. C. differentiation opportunities increase. D. there is increasing emphasis on efficiency. 19. (p. 189) Which of the following is most often true of mature markets? A. Some competitors enjoy a significant operating advantage due to increasing experience effects. B. The market supports premium pricing, which attracts additional competitors. C. Advantages that cannot be duplicated by other competitors are difficult to achieve. D. The magnitude of pricing differences and product differentiation is larger than in the 20. (p. 192) During the decline stage of the industry life cycle, __________ refers to obtaining as much profit as possible and requires that costs be decreased quickly. A. maintaining B. harvesting C. exiting D. consolidating 21. (p. 189) The growth stage of the industry life cycle is characterized by A. "in-kind" competition (from the same type of product). B. premium pricing. C. a growing trend to compete on the basis of price. D. retaliation by competitors whose customers are stolen

CHAPTER 6

31. (p. 201) Corporate-level strategy addresses two related issues: A. how to compete in a given business; the application of technology. B. what businesses to compete in; how these businesses can achieve synergy. C. how to integrate primary activities; increase shareholder wealth. D. how to improve a firm's infrastructure; how to maintain ethical behavior. 34. (p. 206) Philip Morris bought Miller Brewing and used its marketing expertise to improve Miller's market share. This justification for diversification is best described as A. utilizing common infrastructures. B. capitalizing on core competencies. C. reducing corporate risk. D. using portfolio analysis. 37. (p. 206-207) For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements? A. The competence must help the business gain strength relative to its competition. B. The new business must be similar to existing businesses to benefit from a core competence.

C. The collection of competencies should be unique, so that they cannot be easily imitated. D. The new business must have an established large market share. 40. (p. 210) Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of A. leveraging core competencies. B. sharing activities. C. vertical integration. D. pooled negotiating power. 41. (p. 212) The risks of vertical integration include all of the following EXCEPT A. costs and expenses associated with increased overhead and capital expenditures. B. lack of control over valuable assets. C. problems associated with unbalanced capacities along the value chain. D. additional administrative costs associated with managing a more complex set of activities. 42. (p. 212) Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with A. strategic alliances. B. divestment. C. vertical integration. D. horizontal integration. 43. (p. 213) A firm should consider vertical integration when A. the competitive situation is highly volatile. B. customer needs are evolving. C. the firm's suppliers willingly cooperate with the firm. D. the firm's suppliers of raw materials are often unable to maintain quality standards. 44. (p. 214) It may be advantageous to vertically integrate when A. lower transaction costs and improved coordination are vital and achievable through vertical integration. B. the minimum efficient scales of two corporations are different. C. flexibility is reduced, providing a more stationary position in the competitive environment. D. various segregated specializations will be combined. 50. (p. 216) Portfolio management matrices are applied to what level of strategy? A. Departmental level B. Business level C. Corporate level D. International level

54. (p. 217) A "cash cow," referred to in the Boston Consulting Group Portfolio management technique, refers to a business that has A. low market growth and relatively high market share. B. relatively low market share and low market growth. C. relatively low market share and high market growth. D. high market growth and relatively high market share. 55. (p. 217) In managing a firm's portfolio, the BCG matrix would suggest that A. "dogs" should be invested in to increase market share and become cash cows. B. "stars" are in low growth markets and can provide excess cash to fund other opportunities. C. "question marks" can represent future "stars" if their market share is increased. D. "cash cows" require substantial cash outlays to maintain market share. 60. (p. 225) Divesting businesses can accomplish many different objectives, including A. enabling managers to focus their efforts more directly on the firm's core businesses. B. providing the firm with more resources to spend on more attractive alternatives. C. raising cash to help fund existing businesses. D. all of these. 61. (p. 227) A company offering local telecommunications service combines resources with an international company that manufactures digital switching equipment to research a new type of telecommunications technology. This is an example of A. joint diversification. B. strategic alliance. C. divestment. D. global integration. 65. (p. 228) __________ may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through __________ and __________ can provide. A. Strategic alliances; joint ventures; internal development B.Internal development; mergers; acquisitions C. Strategic alliances; mergers; joint ventures D. Mergers; internal development; strategic alliances 67. (p. 232) An antitakeover tactic called (a) __________ is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it. A. golden parachute B. greenmail C. poison pill D. scorched earth 68. (p. 232) An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called A. greenmail. B. a poison pill.

C. a golden parachute. D. scorched earth. 69. (p. 232) The term "golden parachutes" refers to A. a clause requiring that huge dividend payments be made upon takeover. B. financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it. C. managers of a firm involved in a hostile takeover approaching a third party about making the acquisition. D. pay given to executives fired because of a takeover.