25) Starbucks announced that it will be closing approximately 600 of its stores. This information
suggests the firm is most likely using a(n) ________ strategy.
A) consolidation
B) diversification
C) integration
D) expansion
AACSB: Analytical Thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
26) Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that
has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although
beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and
honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the
company’s mission to provide a high-quality, organic beverage to consumers. The 11-year-old
company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf
Tea recently received multimillion dollar investments which will enable the business to expand
its national presence.
Which of the following, if true, would best support the argument that Sweet Leaf Tea should
implement a corporate-level strategy of concentration?
A) Sweet Leaf Tea can expand its customer base and reduce costs by selling its products directly
at Sweet Leaf stores.
B) Sweet Leaf Tea can develop a national name by adding new product lines, such as organic
snack foods and organic coffee.
C) Sweet Leaf Tea’s marketing research indicates that customers would purchase the organic
beverages more frequently if the prices were lower.
D) Sweet Leaf Tea can achieve growth by aggressively selling its beverages in current markets
where loyal customers will help boost word-of-mouth.
AACSB: Reflective thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Critical Thinking
11
27) Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that
has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although
beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and
honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the
company’s mission to provide a high-quality, organic beverage to consumers. The 11-year-old
company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf
Tea recently received multimillion dollar investments which will enable the business to expand
its national presence.
Which of the following, if true, would most likely undermine the argument that Sweet Leaf Tea
should implement a corporate-level strategy of vertical integration?
A) Sweet Leaf Tea lacks the facilities or knowledge to produce the raw ingredients for its
beverages.
B) Market research suggests that Sweet Leaf Tea customers primarily purchase only one flavor
of tea.
C) Most loyal customers of Sweet Leaf Tea purchase the beverage at neighborhood convenience
stores.
D) Sweet Leaf Tea has decided to lower its prices by replacing cane sugar with corn syrup in
some of its beverages.
AACSB: Reflective thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Critical Thinking
12
28) Sweet Leaf Tea, a Texas-based maker of bottled iced tea, is a small but fast-growing firm that
has gained a loyal following for its use of fresh, organic ingredients in its beverages. Although
beverage industry experts recommended that Sweet Leaf replace the organic cane sugar and
honey it uses with less costly high-fructose corn syrup, Sweet Leaf refused because of the
company’s mission to provide a high-quality, organic beverage to consumers. The 11-year-old
company has 50 employees, and its products are available in 30% of the U.S. market. Sweet Leaf
Tea recently received multimillion dollar investments, which will enable the business to expand
its national presence.
Which of the following, if true, best supports the idea that Sweet Leaf Tea has implemented a
competitive strategy of differentiation?
A) Other brands of bottled iced tea compete with Sweet Leaf Tea by offering new flavors at
competitive prices.
B) Sweet Leaf Tea sells both lemonade and tea in a variety of flavors that appeal to consumers of
all ages.
C) Loyal customers of Sweet Leaf Tea seek products that are USDA certified organic despite the
associated higher costs.
D) New Sweet Leaf Tea customers are initially attracted to the unique label and logo on the
bottles.
AACSB: Reflective thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Critical Thinking
29) Walmart competes on price, while Target competes on style. Walmart follows a competitive
strategy based on ________ while Target follows a strategy based on ________.
A) cost leadership, differentiation
B) focusing, cost leadership
C) geographic location, focusing
D) differentiation, niche leadership
AACSB: Analytical Thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
13
30) Which term refers to any factors that allow a firm to differentiate its product or service from
those of its competitors to increase market share?
A) functional strategy
B) competitive advantage
C) corporate strategy
D) related diversification
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
31) Companies like Ferrari are known as ________ because they carve out a market niche and
compete by providing a product that customers can obtain in no other way.
A) cost leaders
B) focusers
C) market leaders
D) visionaries
AACSB: Application of knowledge
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
32) A firm’s functional strategies identify the broad activities that each ________ will pursue in
order to help the firm accomplish its competitive goals.
A) employee
B) executive
C) department
D) HR manager
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
14
33) When mergers and acquisitions fail, it is most likely a result of ________ issues.
A) structural
B) financial
C) technical
D) personnel
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
34) All of the following are services that human resource consulting companies provide during
mergers and acquisitions EXCEPT ________.
A) aligning payroll systems
B) overseeing database recovery systems
C) designating key talent
D) identifying potential pension shortfalls
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
35) The basic steps in the management planning process include setting objectives, reviewing
alternative courses of action, and evaluating which options are best.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
15
36) A mission statement is a general statement of a company’s intended direction that evokes
emotional feelings in the organization’s members.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
37) A vision statement is broader and more future-oriented than a mission statement.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
38) Securing the top team and key talent is the only task assigned to most HR departments
during mergers and acquisitions.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
39) The first step in the strategic management process involves defining the current business and
mission.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
16
40) Compiling information about a company’s environment is more easily accomplished with a
SWOT chart than an environmental scanning worksheet.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
41) A diversification corporate strategy involves expanding a firm by producing necessary raw
materials.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
42) Firms that open facilities overseas are implementing a functional strategy of geographic
expansion.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
43) By emphasizing the safety of its cars, Volvo stands out as an example of a firm that is
implementing a differentiation strategy.
AACSB: Application of knowledge
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
17
44) Consolidation keeps the company’s strategy up-to-date by assessing progress toward strategic
goals and taking corrective action as needed.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
45) Cost leadership, differentiation, and focus strategies are types of corporate-level strategies.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
46) A vertical integration strategy means that the firm will expand by adding new product lines.
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Concept
47) McDonald’s addressed its lagging profitability by first closing stores operating below its
guidelines. McDonald’s used a consolidation strategy.
AACSB: Analytical Thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
18
48) A business-level strategy is implemented by Pizza Hut, Domino’s, Papa John’s, and Little
Caesar’s in their competition with each other for pizza customers.
AACSB: Application of knowledge
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
49) What is strategic management? Define the term. List and describe the seven steps in the
strategic management process.
AACSB: Application of knowledge
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Application
50) Explain the difference between a vision and a mission. What role does a firm’s vision
statement play in corporate and competitive strategies?
AACSB: Reflective thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process.
Skill: Synthesis
19
51) Identify the three levels of strategic planning and describe the function of each level. What is
the relationship between human resource strategy and a firm’s strategic plans?
AACSB: Analytical Thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process. 3.2:
Define strategic human resource management and give an example of strategic human resource
management in practice.
Skill: Synthesis
52) What is a competitive advantage? How does HR management affect a firm’s competitive
advantage? In your answer, provide examples of competitive advantages held by specific firms.
AACSB: Reflective thinking
Chapter: 3
LO: 3.1: Explain with examples each of the steps in the strategic management process. 3.2:
Define strategic human resource management and give an example of strategic human resource
management in practice.
Skill: Synthesis
20