d.
the Boston matrix strategy and the Maslow strategy
e.
major strategies and minor strategies
57. Which of the following is an example of a common approach to corporate-level strategy?
a.
portfolio strategy
b.
adaptive strategies
c.
pioneering strategies
d.
matrix strategies
e.
transient strategies
58. Which of the following is an example of a common approach to corporate-level strategy?
a.
positioning strategies
b.
adaptive strategies
c.
ROI strategies
d.
grand strategies
e.
risk-seeking strategies
59. Starbucks, the operator of Starbucks coffeehouses, also markets a line of compilation CDs under the
brand name Hear Music. The making and marketing of CDs would be an example of:
a.
related differentiation
b.
related diversification
c.
an integrated acquisition
d.
competency acquisition
e.
unrelated diversification
60. When India’s largest manufacturer of soaps and detergents, Nirma Ltd., entered the cement
manufacturing business, it was an example of:
a.
related diversification
b.
market aggregation
c.
acquisition
d.
unrelated diversification
e.
market development
61. When Clorox Corporation, the manufacturer of bleach and bleach-based cleaning products, acquired
Kingsford Charcoal and Prime Choice brand steak sauce, it was an example of:
a.
related differentiation
b.
related diversification
c.
an integrated acquisition
d.
competency acquisition
e.
unrelated diversification
62. The __________ is a portfolio strategy that managers use to categorize their corporation’s businesses
by growth rate and relative market share. This strategy helps them to decide how to invest corporate
funds.
a.
investment matrix
b.
SWOT matrix
c.
BCG matrix
d.
portfolio management matrix
e.
Maslow grid
63. In 2002, the Swiss-based health-care group Roche sold its vitamin division to Dutch-based DMS.
The Roche division was the world’s leading supplier of vitamins, but Roche wanted to concentrate on
its pharmaceuticals and diagnostics divisions. DMS is pleased with its acquisition because it allows
it to concentrate on life science products and performance products, both products in high-growth
markets. In terms of portfolio strategy, the Roche vitamin division was most likely an example of
a(n):
a.
cash cow
b.
star
c.
exclamation mark
d.
problem child
e.
question mark
64. The greatest disadvantage associated with using the BCG matrix and other forms of portfolio strategy
is:
a.
how difficult it is to separate related diversification from unrelated diversification
b.
there is no evidence that unrelated diversification is useful
c.
the difficulty in labeling those products that are in the median range
d.
carrying the strategy over into market globalization
e.
concern about how the strategy appeals to some unethical businesspeople
65. Specialized Bicycle Components, Inc. introduced the first major production mountain bike in 1980.
Two-thirds of its profits come from the sale of mountain bikes. Specialized bikes have a large share
of a fast-growing market. According to the BCG matrix, Specialized mountain bikes would be
classified as:
a.
problem children
b.
cash cows
c.
exclamation points
d.
stars
e.
question marks
66. In the fall of 2003, Coca-Cola announced it was deleting Fruitopia from its product line in the United
States. The product had a low share of a fast-growing market. According to the BCG matrix,
Fruitopia was an example of a(n):
a.
cash cow
b.
exclamation point
c.
question mark
d.
dog
e.
shooting star
67. BASF SE is the biggest chemical company in the world. Its portfolio is helping it weather the weak
demand and high raw material prices plaguing the rest of industry. The company’s main problem is
its crop science businesses, which have a small share of a fast-growing market. According to the
BCG matrix, BASF’s crop science businesses would be classified as a(n):
a.
cash cow
b.
exclamation point
c.
question mark
d.
dog
e.
shooting star
68. In 1977, at age 23, Jake Burton Carpenter left a job at an investment firm to work in a wood shop
where he developed the first marketable snow board. Three decades later, he is the owner of Burton
Snowboards, the leader in the $2.3 billion snow sports industry. In 2006, his company acquired
Channel Islands Surfboards. This is an example of______.
a.
related differentiation
b.
related diversification
c.
and integrated acquisition
d.
competency acquisition
e.
unrelated diversification
69. A __________ strategy, which is manifested in three ways, is a broad corporate-level strategic plan
used to achieve strategic goals and guide the strategic alternatives that managers of individual
businesses or subunits may use.
a.
grand
b.
growth
c.
stability
d.
retrenchment/recovery
e.
repositioning
70. When Deutsche Bank merged with Bankers Trust, a transatlantic banking operation, it became the
world’s largest bank. Since both banking companies had similar core capabilities, this would be
classified as an example of:
a.
related differentiation
b.
related diversification
c.
an integrated acquisition
d.
competency acquisition
e.
unrelated diversification
71. The Hindu is India’s leading daily newspaper. It also publishes Praxis, a management journal, a
market-research-based journal called Urban Pulse, and Sportstar, a weekly sports publication. The
publishers of The Hindu have engaged in:
a.
related diversification
b.
market aggregation
c.
acquisition
d.
unrelated diversification
e.
market development
72. When QVC added an Internet retailing site, experts were surprised at its success. The online store
carries the same merchandise at the same prices that are available on the cable television show. QVC
Internet is the nation’s sixth largest general merchandise retailer and is an example of:
a.
related diversification
b.
market aggregation
c.
acquisition
d.
unrelated diversification
e.
market development
73. The research on diversification in portfolio management indicates that the best approach is probably:
a.
related differentiation
b.
related diversification
c.
unrelated diversification
d.
repositioning
e.
no diversification
74. McDonald’s uses a __________ strategy (a kind of grand strategy) as it increases its profits in France
by offering uniquely French products such as Croque McDo, the McDonald’s version of the popular
French grilled sandwich.
a.
growth
b.
decline
c.
retrenchment/recovery
d.
repositioning
e.
pioneering
75. The purpose of a __________ strategy is to turn around very poor company performance by shrinking
the size or scope of the business.
a.
growth
b.
stability
c.
retrenchment
d.
maturity
e.
repositioning
76. Companies often choose a __________ strategy when their external environment doesn’t change
much, or after they have struggled with periods of explosive growth.
a.
stability
b.
growth
c.
pioneering
d.
portfolio
e.
retrenchment
77. Significant cost reductions, layoffs of employees, closing of poorly performing stores, offices, or
manufacturing plants, or closing or selling entire lines of products or services would be characteristic
of a __________ strategy.
a.
portfolio
b.
retrenchment
c.
stability
d.
firm-level
e.
rehabilitation
78. If successful, the __________ strategy is often followed by a growth strategy.
a.
retrenchment
b.
stability
c.
portfolio
d.
focus
e.
differentiation
79. In 2002, the Swiss-based health-care group Roche sold its vitamin division to Dutch-based DMS.
The Roche division was the world’s leading supplier of vitamins, but Roche wanted to concentrate on
its pharmaceuticals and diagnostics divisions. DMS is pleased with its acquisition because it allows
the company to concentrate on improving its market share of life science products and performance
products. In terms of grand strategies, DMS is using a _____ strategy.
a.
harvesting
b.
recovery
c.
growth
d.
retrenchment
e.
stability
80. Revlon was once the world’s biggest cosmetics company. But over the past few years, its brands
have lost sales and struggled through a series of management setbacks, but still it was reluctant to give
up divisions that were no longer profitable. Which grand strategy does Revlon need to implement if it
is to stay in business?
a.
harvesting
b.
recovery
c.
growth
d.
retrenchment
e.
stability
81. The headline read, “With its share languishing at the lowest point in a decade, Kraft Foods needs to
convert reorganization into growth.” What kind of a grand strategy is the headline recommending
Kraft implement?
a.
harvesting
b.
recovery
c.
growth
d.
retrenchment
e.
stability
82. In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical
products from its production and concentrated on specialty chemicals, a less capital intensive, less
cyclical business. What type of a grand strategy was ICI using?
a.
retrenchment
b.
stability
c.
growth
d.
maturity
e.
cutback
83. Borealis is a chemical manufacturer in Denmark. The company is continuing its successful operation
by sharpening its focus on innovation and increasing spending on high-end production capacity. In
terms of grand strategies, Borealis is using a __________ strategy.
a.
growth
b.
maturity
c.
focus
d.
pioneering
e.
stability
84. Carnival Corp. has purchased a total of 12 different cruise ship lines over the last decade to make it the
world’s most profitable cruise line operator. Carnival Corp. used _____ to increase its profitability.
a.
internal growth
b.
a stability strategy
c.
a pioneering strategy
d.
external growth
e.
a repositioning strategy
85. Companies can achieve growth by:
a.
shrinking the scope of their business
b.
growing internally through direct expansion or creating new businesses
c.
deleting all cash cows from their portfolios
d.
only maintaining stars in their portfolios
e.
doing all of these
86. Companies that are following a __________ strategy would be most likely to try to improve the way in
which they sell the same goods or services to the same customers.
a.
growth
b.
pioneering
c.
retrenchment/recovery
d.
portfolio
e.
stability
87. In an attempt to stop declining profitability, ICI, a British chemical company, deleted petrochemical
products from its production and concentrated on specialty chemicals, a less capital intensive, less
cyclical business. If ICI is successful in making the needed changes, it will more than likely
implement a __________ strategy.
a.
harvesting
b.
revitalization
c.
diversification
d.
revival
e.
recovery
88. The __________ strategy is analogous to pruning roses.
a.
growth
b.
stability
c.
retrenchment/recovery
d.
portfolio
e.
repositioning
89. A(n) __________ strategy is a corporate strategy that addresses the question “How should we compete
in this industry?”
a.
corporate-level
b.
industry-level
c.
firm-level
d.
niche-specific
e.
SBU-level
90. According to Harvard professor Michael Porter, five industry forces—character of rivalry, threat of
new entrants, threat of substitute products or services, bargaining power of suppliers, and the
bargaining power of buyers—determine an industry’s overall attractiveness and its:
a.
potential for long-term change
b.
potential for short-term profitability
c.
level of risk
d.
potential for long-term profitability
e.
potential for short-term growth
91. According to Michael Porter, five industry forces determine an industry’s overall attractiveness and
potential for long-term profitability. Which of the following is one of those forces Porter identified?
a.
existence of complementary products
b.
organizational structure
c.
existing benchmarks
d.
span of management
e.
bargaining power of suppliers
92. Which of the following is NOT one of the five industry forces that determine an industry’s overall
attractiveness and potential for long-term profitability?
a.
character of rivalry
b.
existing complementary products
c.
bargaining power of suppliers
d.
threat of substitute products
e.
bargaining power of buyers
93. __________ is the measure of the intensity of competitive behavior between companies in an industry.
a.
Character of culture
b.
Competitive barrier
c.
Character of the rivalry
d.
Benchmarked rivalries
e.
Product substitutability
94. At the beginning of this decade, the first reality television programs were introduced. They were soon
followed by a flood of similar type television shows including a couple of spoofs. According to
Michael Porter, _____ apparently made the production of reality shows an attractive industry.
a.
character of the rivalry
b.
existing complementary products
c.
bargaining power of suppliers
d.
threat of new entrants
e.
bargaining power of buyers
95. Players in the cosmetics industry include Procter & Gamble, which owns Cover Girl and Max Factor
brands, L’Oreal, which owns L’Oreal and Maybelline brands, Revlon, which owns Revlon and Almay
brands, and Estée Lauder. According to Porter, _____ has the most influence on these company’s
profits.
a.
character of culture
b.
competitive barriers
c.
character of the industry
d.
benchmarked rivalries
e.
threat of substitute products
96. The original CEO of Revlon once called Estée Lauder, one of his competitors, “his arch and
implacable enemy.” This description leads you to believe that Michael Porter would want to examine
the _____ as it influences the industry.
a.
character of culture
b.
competitive barriers
c.
character of the rivalry
d.
benchmarked rivalries
e.
product substitutability
97. Clorox Corporation controls 60 percent of the bleach market. Imagine you are an entrepreneur who is
considering developing and marketing a bleach innovation. Which of Michael Porter’s industry
forces should you be most concerned about?
a.
bargaining power of buyers
b.
threat of substitute products or services
c.
threat of new entrants
d.
bargaining power of suppliers
e.
character of the rivalry
98. The positioning strategies identified by Michael Porter are:
a.
entrepreneurial, growth, and stability
b.
diversification, acquisition, and divestment
c.
defender strategy, diversification, and cost leadership
d.
focus, cost leadership, and differentiation
e.
divestment, cost leadership, and diversification
99. Cost leadership, differentiation, and focus are the three types of __________ strategies discussed in the
text.
a.
grand
b.
niche
c.
positioning
d.
restructuring
e.
portfolio
100. Many experts claim that Kmart failed because it did not have the lowest prices, it was not perceived as
the best in serving a market segment, and it did not provide any specialized services. According to
Michael Porter, Kmart should have:
a.
adopted an entrepreneurial orientation
b.
diversified
c.
used a positioning strategy
d.
implemented a retrenchment strategy
e.
instituted a value-based culture
101. When the Home Depot opened stores in Canada, it ran a series of ads featuring an animated hammer
that was busily reducing prices to show the U.S.-based home improvement store had the lowest prices.
According to Michael Porter, which of the following positioning strategies did the Home Depot adopt
to deal with existing Canadian stores that sold similar products?
a.
cost leadership
b.
diversification
c.
focus
d.
differentiation
e.
repositioning
102. Glassmaker AFG Industries positions itself as the primary supplier of glass used in microwave doors,
shower doors, and patio tables. What type of a positioning strategy does the glass manufacturer use?
a.
adaptive
b.
growth
c.
diversification
d.
differentiation
e.
focus
103. The ad for ASKO washer reads, “Since our humble Swedish beginnings back in 1950, ASKO has been
dedicated to building machines with superior cleaning power, reliability, and style.” ASKO is more
than likely using which kind of positioning strategy?
a.
differentiation
b.
retrenchment
c.
diversification
d.
focus
e.
stability
104. By selling mostly independent-label titles on CDs and vinyl, Insound.com has won a following among
music snobs nationwide. The kind of hard-core fan that Insound attracts buys 21 records a year while a
typical consumer’s annual purchases can be counted on one hand. What type of positioning strategy
does Inbound use?
a.
focus
b.
differentiation
c.
cost leadership
d.
diversification
e.
repositioning
105. Callaway Golf, known for its Big Bertha brand golf clubs and Top-Flite brand golf balls, markets two
brands that have a high-quality, premium-price image. The company is trying to maintain steady
growth even though the number of golfers is declining. What type of adaptive strategy is Callaway
Golf implementing?
a.
proactors
b.
analyzers
c.
prospectors
d.
defenders
e.
reactors
106. The Carl Zeiss Company is the leading manufacturer of optical systems, industrial measurements, and
medical devices. In 2006, its competitor, Optovue introduced RTVue, a new medical technology that
uses a high speed, high resolution infrared beam to probe a patient’s eyes for ailments like glaucoma.
What type of adaptive strategy is Optovue using?
a.
defender
b.
pioneer
c.
analyzer
d.
reactor
e.
prospector
107. Liz Elting is the CEO of Transperfect Translations, a language translation service for businesses. She
started the company in her dorm room in 1992. The company now includes 21 offices on three
continents and employs 160 full-time employees and 4,000 certified language specialists worldwide
with $35 million in revenue in 2004. In terms of the adaptive strategy, Elting is an example of a(n):
a.
proactor
b.
analyzer
c.
prospector
d.
defender
e.
reactor
108. The positioning strategy that uses one of the other two positioning strategies to produce a specialized
product or service is:
a.
focus
b.
differentiation
c.
cost leadership
d.
diversification
e.
repositioning
109. Hohner is a company that manufactures and markets harmonicas, a product with a steady demand rate.
It is so successful at what it does that the company controls 85 percent of the world’s harmonica
industry. In terms of the adaptive strategies, Hohner would most likely be categorized as a(n):
a.
reactor
b.
diversifier
c.
stabilizer
d.
analyzer
e.
defender
110. Sales of Arm & Hammer baking soda had flattened when its manufacturer started promoting new,
innovative uses for its product. By searching for new market opportunities, the manufacturer of Arm
& Hammer is using which type of adaptive strategy?
a.
defenders
b.
cost leaders
c.
analyzers
d.
reactors
e.
prospectors
111. The purpose of __________ strategies is to choose an industry-level strategy that is best suited to
changes in the organization’s external environment.
a.
positioning
b.
differentiation
c.
growth
d.
adaptive
e.
diversification
112. An organization implementing a(n) __________________ strategy would NOT follow a consistent
strategy.
a.
defender
b.
pioneer
c.
analyzer
d.
reactor
e.
prospector
113. Among the adaptive strategies, __________ are a blend of the __________ strategies.
a.
prospectors; analyzers and reactors
b.
analyzers; defenders and reactors
c.
reactors; prospectors and analyzers
d.
reactors; defenders and prospectors
e.
analyzers; defenders and prospectors
114. Which of the adaptive strategies tends to result in the poorest performance?
a.
niche marketers
b.
analyzers
c.
prospectors
d.
defenders
e.
reactors
115. Japanese-based Bandai, the world’s third-biggest toymaker, plans to acquire several smaller companies
in an effort to knock Mattel out of its top position in the industry. The $2.2 billion that Bandai
dedicated to this goal and the companies it acquired are examples of the Japanese
organization’s________.
a.
grand strategies
b.
distinctive competencies
c.
competitive advantages
d.
resources
e.
strategic stances
116. Which of the following organizations are most directly in competition with each other?
a.
Wal-Mart and Limited Too
b.
a local delicatessen and Kroger
c.
FedEx and UPS
d.
an independent bookstore and a library
e.
Good Housekeeping magazine and The Journal of Interactive Marketing
117. Miami Children’s Hospital in Florida has developed nationally ranked cardiac and neuroscience
departments through an alliance of entrepreneurial physicians, hospital administrators, and wealthy
donors. By specializing in cardiology and neuroscience, the hospital distanced itself from competing
hospitals in the Miami area by reducing its:
a.
market similarity
b.
competitive direction
c.
resource similarity
d.
customer autonomy
e.
related diversification
118. From a competitive standpoint, __________ means that the strategic actions that your company takes
can probably be matched by your direct competitors.
a.
market commonality
b.
resource similarity
c.
character of the rivalry
d.
competitive inertia
e.
competitive autonomy
119. Resource similarity and __________ are factors that determine the extent to which firms will be in
direct competition with each other.
a.
market commonality
b.
resource similarity
c.
related diversification
d.
product differentiation
e.
customer autonomy
120. Players in the cosmetics industry include Procter & Gamble, which owns Cover Girl and Max Factor
brands, L’Oreal, which owns L’Oreal and Maybelline brands, Revlon, which owns Revlon and Almay
brands, and Estée Lauder. These manufacturers have:
a.
high market commonality
b.
high competitive autonomy
c.
high cultural similarity
d.
low resource similarity
e.
low market commonality
121. Which of the following statements about market commonality and resource similarity is true?
a.
Market commonality has no influence on the likelihood of an attack.
b.
Response similarity largely affects response capabilities.
c.
Resource similarity has no influence on the likelihood of an attack.
d.
When resource similarity is strong, the responding firm cannot match the strategic moves
of the attacking firm.
e.
A firm is more likely to attack firms with similar levels of resources.
122. As direct competitors, Verizon and AT&T would have:
a.
a low degree of resource variability
b.
a high degree of market commonality
c.
a low degree of competitive inertia
d.
a low degree of market commonality
e.
a high degree of resource synergy
123. Under conditions of __________, a competitive attack by the stronger rival is more likely to produce
sustained competitive advantage.
a.
high market commonality
b.
high competitive autonomy
c.
high resource similarity
d.
low resource similarity
e.
low market commonality
124. In 1977, at age 23, Jake Burton Carpenter left a job at an investment firm to work in a wood shop
where he developed the first marketable snow board. Three decades later, he is the owner of Burton
Snowboard, the leader in the $2.3 billion snow sports industry. Jake Burton Carpenter engaged in:
a.
creating synergy
b.
entrepreneurship
c.
green marketing
d.
reciprocity
e.
portfolio analysis
125. In many urban areas, the hospital industry is very competitive. But some hospitals are using a(n)
_____ strategy to distance themselves from their competition. One such hospital is Cooper University
Hospital in Camden, New Jersey. Its new addition has well-lit private rooms and a staff trained in
customer service by the Ritz-Carlton Hotel organization to attract aging baby boomers.
a.
prospector
b.
defender
c.
reactor
d.
attack
e.
analyzer
126. Liz Elting is the CEO of Transperfect Translations, a language translation service for businesses. She
started the company in her dorm room in 1992. The company now includes 21 offices on three
continents and employs 160 full-time employees and 4,000 certified language specialists worldwide
with $35 million in revenue in 2004. Elting used the firm-level strategy of _____.
a.
growth
b.
adaptive strategy
c.
entrepreneurship