With an unrelated diversification strategy, the types of companies that make particularly
attractive acquisition targets are:
A. struggling companies with good turnaround potential, undervalued companies that
can be acquired at a bargain price, and companies that have bright growth prospects but
are short on investment capital.
B. companies offering the biggest potential to reduce labor costs.
C. cash cow businesses with excellent financial fit.
D. companies that are market leaders in their respective industries.
E. companies that employ the same basic type of competitive strategy as the parent
corporation’s existing businesses.
Which of the following is NOT one of the ways that a company that a
non-capital-intensive can achieve a cost advantage by revamping its value chain?
A. Creating a direct sales force and bypassing activities and costs of distributors and
dealers
B. Conducting sales operations at the company’s website
C. Increasing production capacity and then striving hard to operate at full capacity
D. Relocating facilities so as to curb the cost for shipping and handling activities
E. Streamlining operations by eliminating low value-added or unnecessary work steps
and activities
An information technology multinational issues a public statement that the company’s
accounts had been falsified by billions of dollars over recent years to keep new
investments flowing in. Following the news, the CEO is arrested and the company’s
stock price sharply declines. Which of the following has the company incurred?
A. Only visible and internal administrative costs
B. Visible but not intangible costs
C. Visible and intangible costs
D. Internal administrative costs but not visible costs
E. Internal administrative costs but not intangible costs
An economy of scope is BEST illustrated by being able to eliminate or reduce costs by:
A. combining related value-chain activities of different businesses into a single
operation.
B. performing all of the value chain activities of related sister businesses at the same
location.
C. extending the firm’s scope of operations over a wider geographic area.
D. expanding the size of a company’s manufacturing plants.
E. having more value chain activities performed in-house rather than outsourcing them.
The characteristics of a strong-culture company include all of the following EXCEPT:
A. deeply rooted values and operating approaches that “regulate” the conduct of a
company’s business and the climate of its workplace.
B. strong managerial commitment to display company values and principles in their
own actions and behavior.
C. dedicated efforts on the part of management to communicating values and business
principles to organization members and explaining how they relate to the company’s
business environment.
D. ingrained shared values and business principles guide management in making
decisions.
E. co-worker peer pressure to challenge cultural norms.
Which of the following is a substantive culture-changing action that a company’s
managers can undertake to alter a problem culture?
A. Identify aspects of the present culture that pose problems.
B. Revise policies and procedures in ways that will help drive cultural change and
replace senior executives who are resisting and obstructing needed organizational and
cultural changes.
C. Empower employees to adopt whatever new work practices they believe will be an
improvement.
D. Make a concerted effort to turn the company’s core competencies into distinctive
competencies.
E. Shift from decentralized to centralized decision-making so as to give senior
executives more authority and control in driving cultural change.
A primary drawback of a global strategy is that it:
A. allows firms to address local needs as precisely as locally based rivals can.
B. permits firms to be more responsive to changes in local market conditions, either in
the form of new opportunities or competitive threats.
C. provides for lower transportation costs and also may involve higher tariffs.
D. involves higher coordination costs due to more complex tasks of managing a
globally integrated enterprise.E. raises production costs due to the greater variety of
designs and components.
The heart and soul of a company’s strategy-making effort is determining how to:
A. become the industry’s low-cost provider.
B. maximize profits and shareholder value.
C. improve the efficiency of its business model.
D. maximize profits while simultaneously operating in a socially responsible manner
that keeps the company’s prices as low as possible.E. come up with moves and actions
that produce a durable competitive edge over rivals.
In competing in foreign markets, companies find it advantageous to concentrate their
activities in a limited number of locations in all of these situations, EXCEPT when:
A. there are significant scale economies in performing an activity.
B. the costs of manufacturing or other activities are significantly lower in some
geographic locations than in others.
C. when there is a steep learning or experience curve associated with performing an
activity in a single location (thus making it economical to serve the whole world market
from just one or maybe a few locations).
D. certain locations have superior resources, allow better coordination of related
activities, or offer other valuable advantages.
E. the addition of new production capacity will not adversely impact the supply-demand
balance in the local market.
For an unrelated diversification strategy to produce financial results above that of
stand-alone entities, executives must do all of the following EXCEPT:
A. diversify into businesses that can produce consistently good earnings and returns on
investment and thereby satisfy the attractiveness test.
B. negotiate favorable acquisition prices (to satisfy the cost-of-entry test).
C. do a superior job of corporate parenting via high-level managerial oversight and
resource sharing, financial resource allocation and portfolio management, or
restructuring underperforming businesses (to satisfy the better-off test).
D. satisfy the attractiveness test, the cost-of-entry test, and the better-off test.
E. leverage the cross-business strategic fit advantage effectively
Which of the following is NOT a good option for trying to remedy high internal costs
vis–vis rivals’ firms?
A. Finding ways to detour around activities or items where costs are high
B. Redesigning the product or some of its components to permit more economical
manufacture or assembly
C. Implementing aggressive strategic resource mapping to permit across-the-board cost
reduction
D. Outsourcing high-cost activities to vendors or contractors who can perform them
more economically
E. Relocating high-cost activities (like manufacturing) to geographic areas (like China
or Latin America or Eastern Europe) where they can be performed more cheaply
A company that pursues and achieves strategic objectives:
A. is likely to weaken the achievement of its short-term and long-term financial
objectives.
B. believes that the company’s financial performance is not as important as it really is.
C. is generally not strongly focused on its true mission of making a profit.
D. is frequently in a better position to improve its future financial performance because
of the increased competitiveness that flows from the achievement of strategic
objectives.
E. is likely to be a weak financial performer because diverting resources to the pursuit
of strategic objectives takes away from the achievement of financial performance
targets.