51.
The corporate-level strategy that becomes appropriate when managers see the need to
reduce the size of their organizations to increase performance is ________.
A.
vertical integration
B.
international expansion
C.
market development
D.
concentration on a single industry
Concentration on a single industry becomes an appropriate corporate-level strategy when
managers see the need to reduce the size of their organizations to increase performance.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
52.
An organization purchases one of its suppliers in order to obtain access to the raw
materials it needs for its production. The organization is using a(n) _______ corporate-level
strategy.
A.
international expansion
B.
vertical integration
C.
diversification
D.
market development
Vertical integration is a corporate-level strategy in which a company expands its business
operations either backward into a new industry that produces inputs for the company’s
products (backward vertical integration) or forward into a new industry that uses,
distributes, or sells the company’s products (forward vertical integration).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
53.
Firestone Tire and Rubber Company purchases rubber plantations in Africa so that it will
have a source of supply for its tire manufacturing plants in Akron, Ohio. This is an example
of a _______ strategy.
A.
forward vertical integration
B.
global
C.
diversification
D.
backward vertical integration
Purchasing firms that produce inputs for the company’s products is backward vertical
integration. Vertical integration is a corporate-level strategy in which a company expands
its business operations either backward into a new industry that produces inputs for the
company’s products (backward vertical integration) or forward into a new industry that
uses, distributes, or sells the company’s products (forward vertical integration).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
54.
Firestone Tire and Rubber Company set up a chain of Firestone retail stores to sell its
tires to American consumers. This is an example of ________.
A.
forward vertical integration
B.
global strategy
C.
focused differentiation strategy
D.
multidomestic strategy
Setting up stores that sell the company’s own products makes it forward vertical
integration. Vertical integration is a corporate-level strategy in which a company expands
its business operations either backward into a new industry that produces inputs for the
company’s products (backward vertical integration) or forward into a new industry that
uses, distributes, or sells the company’s products (forward vertical integration).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
55.
PepsiCo purchased KFC so that it could replace Coke products with Pepsi products in KFC
restaurants. This is an example of a _________ strategy.
A.
horizontal integration
B.
vertical integration
C.
low-cost
D.
global
Purchasing outlets that sell the company’s products makes it forward vertical integration.
Vertical integration is a corporate-level strategy in which a company expands its business
operations either backward into a new industry that produces inputs for the company’s
products (backward vertical integration) or forward into a new industry that uses,
distributes, or sells the company’s products (forward vertical integration).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
56.
When Gallo purchased a company that makes wine bottles, it was involved in ________.
A.
horizontal integration
B.
backward vertical integration
C.
forward vertical integration
D.
upward integration
Purchasing a supplier of raw materials is backward vertical integration. Vertical integration
is a corporate-level strategy in which a company expands its business operations either
backward into a new industry that produces inputs for the company’s products (backward
vertical integration) or forward into a new industry that uses, distributes, or sells the
company’s products (forward vertical integration).
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
57.
When PepsiCo purchased Frito-Lay and expanded its operations into the snack-food
business, it was pursuing a ________ strategy.
A.
vertical integration
B.
market penetration
C.
diversification
D.
market development
Diversification is the corporate-level strategy of expanding a company’s business
operations into a new industry in order to produce new kinds of valuable goods or
services. Example includes PepsiCo’s diversification into the snack-food business with the
purchase of Frito-Lay.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
58.
When TechnoSol Ltd. designed a corporate-level strategy, which includes expanding its
operations into a new type of business for the organization, TechnoSol was pursuing a(n)
_______ strategy.
A.
concentration on a single business
B.
international expansion
C.
vertical integration
D.
diversification
Diversification is the corporate-level strategy of expanding a company’s business
operations into a new industry in order to produce new kinds of valuable goods or
services.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
59.
When General Electric Company expanded its operations by acquiring NBC television, this
was an illustration of ________.
A.
vertical integration
B.
diversification
C.
market penetration
D.
a low-cost strategy
Diversification is the corporate-level strategy of expanding a company’s business
operations into a new industry in order to produce new kinds of valuable goods or
services.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
60.
Two divisions of a company decide to use the same manufacturing facilities to capitalize
on the organization’s excess capacity and to reduce the fixed costs assigned by corporate
headquarters. This is an example of ________.
A.
concentration on a single business
B.
international expansion
C.
focused differentiation strategy
D.
synergy
Synergy is obtained when the value created by two divisions cooperating is greater than
the value that would be created if the two divisions operated separately and
independently. Two or more of the divisions of a diversified company can utilize the same
manufacturing facilities, distribution channels, or advertising campaigns—that is, share
functional activities. Each division has to invest fewer resources in a shared functional
activity than it would have to invest if it performed the functional activity by itself.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
61.
Medien Corporation decides to enter a new type of business in order to create a
competitive advantage in one of its existing businesses. Medien is engaging in ________.
A.
concentration on a single business
B.
related diversification
C.
vertical integration
D.
international expansion
Related diversification is the strategy of entering a new business or industry to create a
competitive advantage in one or more of an organization’s existing divisions or businesses.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
62.
Procter & Gamble uses a joint sales force to sell both its laundry detergent products and
its bath soap products to the same supermarket chains. This is an example of ________.
A.
a focused differentiation strategy
B.
a low-cost strategy
C.
a differentiation strategy
D.
synergy
The way Procter & Gamble’s disposable diaper and paper towel divisions cooperate is a
good example of the successful production of synergies. These divisions share the costs of
procuring inputs such as paper and packaging, a joint sales force sells both products to
retail outlets, and both products are shipped using the same distribution system.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
63.
When Procter & Gamble uses the same distribution system to deliver its oral care products
and its hair care products to drugstore chains, this is an example of ________.
A.
synergy
B.
focused differentiation strategy
C.
diversification strategy
D.
unrelated diversification strategy
The way Procter & Gamble’s disposable oral care products and hair care product divisions
cooperate is a good example of the successful production of synergies. These divisions
share the costs of procuring inputs such as paper and packaging, a joint sales force sells
both products to retail outlets, and both products are shipped using the same distribution
system.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
64.
When an organization enters a new type of industry, which is not similar in any way to the
current businesses of the organization, it is engaged in ________.
A.
concentration on a single business
B.
unrelated diversification
C.
international expansion
D.
related diversification
Managers pursue unrelated diversification when they establish divisions or buy companies
in new industries that are not linked in any way to their current businesses or industries.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
65.
When Electrix, Ltd., sells its TVs and DVD players using the same basic marketing
approach in various countries, it is pursuing ________.
A.
a multidomestic strategy
B.
a focused low-cost strategy
C.
a global strategy
D.
vertical integration
If managers decide that their organization should sell the same standardized product in
each national market in which it competes, and use the same basic marketing approach,
they adopt a global strategy.
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
66.
Unilever sells different products using a different marketing approach in England than it
uses when marketing these products in the United States. This is an example of a
________ strategy.
A.
vertical integration
B.
focused low-cost
C.
global
D.
multidomestic
If managers decide to customize products and marketing strategies to specific national
conditions, they adopt a multidomestic strategy.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
67.
The least complex global operation is _______.
A.
a joint venture
B.
exporting
C.
licensing
D.
franchising
The least complex global operations are exporting and importing. A company engaged in
exporting makes products at home and sells them abroad.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
68.
Jespher, Inc., allows Hertonz, a foreign organization, to take charge of both manufacturing
and distributing one or more of its products in Thailand in return for a negotiated fee. This
is an example of ________.
A.
exporting
B.
licensing
C.
a strategic alliance
D.
a joint venture
In licensing, a company (the licenser) allows a foreign organization (the licensee) to take
charge of both manufacturing and distributing one or more of its products in the licensee’s
country or world region in return for a negotiated fee.
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
69.
Madison Hotels sold a foreign organization the right to use its brand name and operating
know-how in return for a lump-sum payment and a share of the profits. This is an example
of ________.
A.
franchising
B.
licensing
C.
a strategic alliance
D.
a joint venture
In franchising, a company (the franchiser) sells to a foreign organization (the franchisee)
the rights to use its brand name and operating know-how in return for a lump-sum
payment and a share of the franchiser’s profits.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
70.
The form of international expansion which gives an organization high potential return
because the organization does not have to share its profits with a foreign organization, and
it reduces the level of risk because the organization’s managers have full control over all
aspects of their foreign company’s operations, is ________.
A.
a joint venture
B.
franchising
C.
exporting
D.
a wholly owned foreign subsidiary
When managers decide to establish a wholly owned foreign subsidiary, they invest in
establishing production operations in a foreign country independent of any local direct
involvement. It gives an organization high potential return because the organization does
not have to share its profits with a foreign organization, and it reduces the level of risk
because the organization’s managers have full control over all aspects of their foreign
subsidiary’s operations.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy
71.
Industries that are characterized by permanent, ongoing, intense competition brought
about by advancing technology or changing customer tastes, fads, and fashions are an
example of ________.
A.
a joint venture
B.
differentiation
C.
focused competition
D.
hypercompetition
The term “hypercompetition” applies to industries that are characterized by permanent,
ongoing, intense competition brought about by advancing technology or changing
customer tastes and fads and fashions. Clearly, planning and strategy formulation are
much more difficult and risky when hypercompetition prevails in an industry.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-01 Identify the three main steps of the planning process, and explain the relationship between
planning and strategy.
Topic: Strategic Planning
72.
When managers pool or share their organization’s resources and know-how with those of
a foreign company, and the two organizations share the rewards or risks of starting a new
venture in a foreign country, the two organizations are involved in ________.
A.
a joint venture
B.
a strategic alliance
C.
differentiation
D.
licensing
One way to overcome the loss-of-control problems associated with exporting, licensing,
and franchising is to expand globally by means of a strategic alliance. In a strategic
alliance, managers pool or share their organization’s resources and know–how with those
of a foreign company, and the two organizations share the rewards or risks of starting a
new venture in a foreign country.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 06-03 Differentiate between the main types of corporate-level strategies, and explain how they are
used to strengthen a company’s business-level strategy and competitive advantage.
Topic: Corporate-Level Strategy