Corporate Strategy Test Answers
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Which of the following is an example of a
retrenchment strategy?
Delta airlines reducing flights to several areas of
the United States.
Google investing in the expansion of fiber networks
to build its broadboard services offerings.
Facebook purchasing popular photo-sharing service
Instagram.
Amazon redesigning its website to better accomodate
mobile users.
True or False? Operational Management focuses
on the responses of external market issues.
True
False
How can corporations use executive
compensation to focus management decision making on goals that are important to
shareholders?
Include a golden parachute provision.
Include a non-compete provision.
Include a stock option grant provision.
Include a golden handcuff provision.
What company-wide message is delivered to
describe a corporation's reason to exist?
Mission Statement
Motto
Marketing strategy
Slogan
True or False? Corporate strategy deals with
industries the firm seeks to compete in.
True
False
Of the following, which is a potential course
of action in the event of a catastrophic failure in growth strategies?
Expansion
Concentration
Diversification
Corporate restructuring
Which of the following best describes the
stakeholder approach to social responsibility?
Organizations should consider solely the impact
their decision will have on profits.
Organizations should consider the intersts of only
employees, investors, and customers when making decisions.
Organizations should consider the interests of all
parties who have the potential of being affected by a decision.
Organizations should consider primarily the
interests of their shareholders.
What is organizational stability?
Organizational stability is when a firm expands its
size
Organizational stability is when a firm acquires
another business
Organizational stability is when a firm diversifies
its market
Organizational stability is when a firm maintains
its current size
An acquisition is the outright purchase of
another company. What is a merger?
A merger takes place when one company leverages its
purchase of another company with external funding.
A merger takes place when one company sells
products from another company.
A merger takes place when one company buys another
company.
A merger is a legal transaction that takes place
when two or more organizations unite through an exchange of stock.
Which of the following is a business function
of the value chain?
(All of these)
Marketing and Sales
Research and Development
Production
What is an example of a long-term
consideration of a strategic corporation?
Future market entry, and mergers and acquisitions
Quarterly sales objectives
Annual performance
Quarterly earnings
What is an example of a benefit gained from
corporate governance framework?
A decrease in environmental concerns that allows
companies to earn more profits
Increased revenues and stock options
A relaxing of ethical concerns which allows
corporations to earn more profits
Ethical operations and good relationships with
stakeholders ensure that all interested parties work towards a collective
strategy
When diversifying, what must be kept in tact
to maintain the survival of the firm?
The retention rate of the staff
A companies sustainable competitive advantage
The retention rate of customers
The integrity of the staff
Why would a firm use diversification as a
strategy?
Diversification allows a company to focus more on
its core business functions
Diversification offers a company the opportunity to
expand beyond its core business
Diversification offers a firm the opportunity to
compete in unknown markets
undervalued assets or is in financial distress
Concentration strategy is when a corporation
does what?
Focuses on its primary line of business
Focuses on acquiring other businesses
Concentrates on a diverse portfolio
Focuses on strategies to expand internationally
What role does corporate governance framework
play in corporate strategy?
Corporate governance framework ensures that
corporate strategies are pursued with financial gain as their only objective
Corporate governance framework ensures that
corporate strategies are leveraged purely for self interest
Corporate governance framework ensures that
corporate strategies are pursued ethically
Corporate governance framework plays no role in
corporate strategy
What is the term used to describe a broad
vision that outlines where a company wants to go?
Tactical plan
Operational plan
Stategic plan
Core value statement
True or False? Benchmarking is comparing a
firm's business metrics to the industry's bests.
True
False
Performance benchmarking let's a firm:
compare its overall productivity.
compare its efficiency.
assess its competitive position compared to
target/peer firms.
Which of the following costs of inventory
production is associated with storing products until they are to used or sold?
setup cost
stockout cost
holding cost
ordering cost
What is the term used to describe a statement
that oulines what a company does and its reason for existing?
Core value statement
Operating statement
Mission statement
Vision statement
Which one of the following are Porter's
generic strategies
Segmentation Strategy
Differentiation Strategy
Cost Leadership
(All of these)
True or False? The Business Process
Improvement system is an approach to help a company achieve efficient results.
False
True
Which of the following is NOT an example of a
corporate social responsibility activity?
Increasing short-term profitability by extending
the life cycle of equipment past the recommended period.
Donating unsold or obsolte prodcuts to local
non-profit organizations.
Using recylced paper cups as opposed to cups
composed of polystyrene.
Offering employees flexible working arrangements to
balance work and family responsibilities.
What is the process where one company
purchases another and absorbs it into its existing operations?
divestiture
acquisition
liquidation
merger
What growth strategy is implemented with the
combination of equity and significant amounts of debt, while utilizing the
target's assets to pay off said debt?
A merger
An acquisition
A hostile takeover
A leveraged buyout
Which of the following best categorizes
individuals or groups who have an interest in the actions of an organizations?
Stockholders
Stakeholders
Shareholders
Investors
What is a characteristic of a firm that is
ideal for diversification?
A firm that is deeply in debt
A firm who recently began selling public stock
A firm that has the excess resources and
capabilities to expand profitability
A firm that is earning enough to break even
What is the main difference between corporate
and business strategy?
There is no difference in the two
Business strategy focuses on individual business
units, while corporate strategy focuses on the overall direction a corporation
must take
Business strategy focuses on business as a global
unit, while corporate strategy focuses on the overall direction of individual
business units
Business strategy focuses on business as a global
unit, while corporate strategy focuses on the overall direction a corporation
must take
What is the difference between earnings per
share and diluted earnings per share?
Diluted earnings per share includes outstanding
common stock and all convertible securities.
Earnings per share includes the stock options of
employees.
Earnings per share includes warrants and
convertible securites.
Diluted earnings per share does not assume all
convertible securities are exercised.
What is the purpose of the poison pill?
To make the corporation appear more attractive to a
prospective buyer.
To provide instant profits to investors.
To prevent a hostile takeover.
To increase long-term profitability.
Developed by Kurt Lewin, the force field
analysis helps managers identify the forces that encourage and prevent change
in their organizations. According to the force field analysis, how should
managers implement change?
By increasing restraining forces and holding
driving forces constant.
By increasing or holding constant driving forces
and decreasing restraining forces.
By increasing driving forces and restraining
forces.
By increasing restraining forces and decreasing
driving forces.
Why would a corporation choose to focus on
related diversification?
Related diversification allows a company to expand
into exactly the same market it is in
Related diversification poses no benefit because
the company has already dominated the market it is in
Related diversification allows a company to
diversify and share facilities and resources to reduce costs
A company cannot utilize related diversification as
a strategy because it is redundant to use similar facilities to produce their
products
Why are products identified as 'question
marks' in the BCG Matrix challenging for management?
They are unprofitable.
They possess significicant market share and
management may not have the resources to leverage them.
They possess low market growth and thus have
limited potential.
They could develop into 'stars', but they can also
turn into 'dogs'.
What is total quality management (TQM)?
A strategy focused on decreasing the number of
defective products.
A philosophy for decreasing the number of
one-the-job accidents.
A technique used to increase the rate or
production.
A management approach focused on customer focus,
continuous improvement, and teamwork.
What are products that occupy the low market
share and low growth quadrant of the BCG Matrix called?
Dogs
Question marks
Stars
Cash cows
Which of the following positioning strategies
requires an organization to produce a specialized product or service that is
targeted towards a small segment of customers?
differentiation strategy
firm level strategy
focus strategy
cost leadership strategy
In 2014, Google announced that it was selling
Motorola Mobility to Lenovo for roughly $2.91 billion. What is this an example
of?
divestiture
retrenchment
carve-out
spin-off
What legal issue could potentially arise as a
result of horizontal integration strategies?
Patent violations
Trademark infringement
Copyright violations
Antitrust violations
Which of the following is a potential
detriment that vertical integration causes?
Increase in centralization and a reduction in
flexibility
Increase in centralization and an increase in flexibility
Increase in expansion and an increase in
flexibility
Increase in globalization and a reduction in
flexibility
Which of the following is not a step to the
performance management cycle?
providing feedback
setting performance expectations
establishing incentives
evaluating performance
What is financing derived from the sale of
common stock or from retained earnings?
equity financing
stock financing
debt financing
leverage financing
What are two methods of implementing growth
strategies?
Insolvency and synergy
Concentration and liquidation
Mergers and acquisitions
Diversification and concentration
What major disadvantage can a firm encounter
with related diversification?
Difficulty in managing new products
Difficulty in managing new personnel
Difficulty in managing different, but related
businesses
Difficulty in managing single business units
Vertical integration provides what benefit to
a firm?
Decrease in waste
Increase in expansion capabilities
Increase in personnel
Reduced purchasing and selling costs
What benefit would diversification pose for a
company such as BP?
It allows a secondary profit channel in the case
its main product becomes undesirable
It allows them the opportunity to restructure their
core
It allows them to sell their primary product in a
different market
It allows them to sell different products within
their core market
Which of the following is not considered a
corporate growth strategy?
Analytical expansion
International expansion
Diversification
Concentration
In 2013, Office Max and Office Depot completed
a merger that allowed them to increase operating efficiencies. What is this
type of merger known as?
vertical merger
divestiture
conglomerate merger
horizontal merger
What is an example of a growth strategy a firm
may pursue?
Restructuring
National growth
Internal growth
International expansion
According to the product life cycle, which
stage do products occupy if they are characterized by slowing growth and lower
profits caused by increased competition?
Maturity
Introduction
Growth
Decline
What activity must come first in the
performance management process?
Specifying the relevant aspects of performance.
Identifying behaviors that lead to increased
performance
Providing performance feedback.
Appraising performance.
According to Michael Porter's five forces,
what is the impact of increased buyer power?
Consolidation among established organizations as they
look to increase control over prices.
Reduced business profitability as buyers exert
downward pressure on prices.
Increased number of new entrants into the market.
Increased product differentiation as organizations
look to other ways to maintain control over prices.
How should a corporation structure itself in
order to maximize its abilities to execute a strategy?
Static and dynamic
A corporation should be decentralized and flexible
Centralized and flexible
Static and flexible
Which of the following statements best
describes corporate strategy?
How a company manages a diversified portfolio of
products.
How a company allocates resoures across different
businesses.
How a company creates value across different
businesses.
How a company organizes itself.
What is corporate governance framework?
Corporate governance framework defines the rules
and practices necessary for ethical compliance.
Corporate governance framework defines the federal
regulations and practices necessary for ethical compliance.
Corporate governance framework dictates the rules
and practices necessary for environmental compliance.
Corporate governance framework defines the rules
and practices necessary for strategic advancement.
What are the three varieties of Vertical Integration?
Forward, Balanced, Horizontal
Backward, Forward, Balanced
Backward, Balanced, Horizontal
Backward, Forward, Horizontal
Why is performing a gap analysis helpful in
the change process?
Because it forces an organization to identify both
its current and desired state of being.
Because doing so outlines the necessary steps to
implement the change.
Because it forces an organization to identify those
forces that need to be overcome to implement the change.
Because it helps to convince employees that the
change is positive.
What is inventory turnover?
The number of times annually that a company sells
its average inventory.
Inventory that is stolen, damaged, or returned as
defective.
The dollar value of the inventory sold within 30
days.
The number of days required to sell through a
company's average inventory.
When growth is vertical, what does this mean
for a corporation?
It means that the products the company sells are
from a single product line
It means that the corporation has expanded abroad
It means that they're developing new products
It means that the corporation has expanded beyond
primary business
Which of the following is not considered to be
a level of strategy in an organization?
corporate stategy
strategic business unit strategy
functional strategy
operational strategy
What kind of outlook would make organizational
stability a prudent action?
A strong future
A future with diversification planned
An uncertain future
A future anticipating a series of buyouts
Which of the following is generally considered
the first step to implementing results-driven change?
Soliciting input from employees on how to increase
performance.
Stressing the importance of change in the organization.
Setting measurable short-term goals to improve
performance
Eliminating those impediments or forces that
prevent change and ecourage the status quo.
Which of the following is a potential
detriment to concentration strategies?
International expansion.
The price of their stock plummeting.
A firm may lose its competitive advantage by
expanding into unknown markets and developing unfamiliar products.
A firm may generate unexpected competition from
other businesses.
Which error in decision-making typically
results when managers have already devoted significant resources to a project
but have yet to see financial results?
prior hypothesis bias
escalation of commitment
recency bias
illusions of control
What BCG Matrix strategy calls for reducing
investment in a product to maximize profits and produce positive cash flows?
Build market share strategy
Harvest strategy
Hold strategy
Divestiture strategy
Can a business strategy be interchangeable
with a corporate strategy?
No. A corporate strategy has to focus globally,
while business strategy focuses on individual units.
Yes. One can be scaled into the other.
Yes. The main difference is that business strategy
aspires to be corporate strategy.
Yes. It is directly interchangeable.
With the inherent risk involved, why would a
company choose unrelated diversification as a strategy?
A firm targeted for acquisition has more personnel
than the acquiring firm
A firm targeted for acquisition has valuable assets
A firm targeted for acquisition is more stable than
the acquiring firm
A firm targeted for acquisition has undervalued
assets, or is in financial distress
Which of the following is true regarding the
impact of diversification on an organization's performance?
An organization's performance generally decreases
as it shifts from a related diversification strategy to an unrelated
diversification strategy.
An organization's performance generally decreases
as it shifts from a single-product strategy to related diversification
strategy.
An organization's performance generally increases
as it shifts from a related diversification strategy to an unrelated
diversification strategy.
An organization's performance generally increases
as it shifts from a related diversification strategy to a single-product
strategy.
There are two major types of diversification.
What are they?
Related and unrelated
Static and dynamic
Strategic and non-strategic
National and international
The Heptalysis Analysis is an early stage
business/venture analysis using how many categories?
8
4
7
5
Which of the following is not a component to
managing performance through management by objectives (MBO)?
Managers monitor progress and provide feedback
during the assessment period.
Establishing specific, difficult, and objectives
goals.
Managers and employees working together to set
mutually agreeable goals.
Agreeing on rewards that are likely to increase
employee motivation.
What does the L stand for in the PESTLE
Analysis?
Law
Legal
Loss
Liability
A firm replacing suppliers is vertically
integrating ________________.
Downstream
Balanced
Horizontal
Upstream
Which of the following is a economic value
trait?
Income
Success rate
GNP
Sustainability
What method of operation the production of
standardized products that can be produced prior to receiving customer orders?
continuious-flow operations
assemble-to-order operations
make-to-stock operations
make-to-order operations
What does it mean to integrate horizontally?
A corporation defeats its competition
A corporation buys its competition
A corporation competes with its competition
A corporation collaborates with its competition
What is an example of horizontal integration?
Walmart buying the excess of an overproduced
competitor product and selling it as a Great Value brand
Walmart creating and outselling a competitors
product
K-Mart buying a competing company and rebranding
the competitors products as their own
Walmart recognizing a competitor has overproduced
and producing more than their competitor
Which of the following is not a major
perspective of the balanced scorecard?
business process indicators
employee performance indicators
customer service indicators
financial
When a firm engages in unrelated
diversification, what kind of market are they expanding into?
A market without a strategic fit or theme
A market that is failing
A market with a similar business core and similar
products
A market with a different business core, but similar
products
True or False? NACIS is a measurement of
diversification.
True
False
Which of the following is part of John Kay's
value chain concept?
Market focus
Cost minimization
Innovation
Product differentiation
Of the following, which would benefit most
from corporate strategy?
Kraft General Foods
Wrigley
New Belgium Brewing
Coca-Cola
What is the term for a strategy where a
business seeks to establish a long-term competitive advantage by improving
value chain activities that substantially lower costs?
loss leader strategy
market penetration strategy
low-cost strategy
value chain strategy
Allocating capital throughout a diverse
portfolio allows corporations to achieve what objective?
Corporate advantage
Corporate synergy
Corporate diversification
Corporate synthesis
As a consequence of majority accounting
scandals in the early 2000's, U.S. corporations have been forced to modify
their existing governance structure. Which of the following represents the most
significant change to the governance structure of U.S. corporations?
Chief financial officers now report directly to the
board of directors.
Internal corporate auditors must now review all
financial reports generates by corporate accountants.
Chief executive officers must now sign off
financial results.
The increased role of the corporate internal
auditor.
Which of the following barriers to change can
be overcome by involving affects parties in the change process as closely as
possible?
failure to perceive benefits
organizational politics
fear of loss
excessive focus on costs
What does the M stand for in the MOST Business
Analysis?
Mission
Market
Margin
Matrix
How many steps are there in the business
process improvement analysis?
5
7
6
8
What type of strategy attempts to answer the
question: "How should we compete against a particular organization?"
firm level strategy
industry level strategy
corporate strategy
positioning strategy
Speed-based strategies focus on allowing the
business to meet customer needs more quickly than competitors. Which of the
following is an important activity to implementing a speed-based strategy?
Working closely with suppliers and even requesting
suppliers to locate near distribution centers.
Decreasing product development cycles.
Increasing customer responsiveness.
Using automation to perform certain tasks.
Which of the following is not a social factor
of the PEST analysis?
Career Attitudes
Economic growth
Population growth rate
Safety
When a firm engages in product-market
exploration strategies, how is its focus shifting?
The firm is focusing on hostile takeovers
The firm is focusing primarily on its current
products and their current markets
The firm is expanding internationally
The firm is focusing on developing new products and
entering new markets
What is a competitive advantage?
Something that allows an organization to achieve
sales revenues that are greater than the industry average.
Something that allows an organization acess to
greater market share.
Something that allows an organization to
differentiate itself from others.
Something that allows an organization to achieve
profitability that is greater than the industry average.
What duration should a firm undertake to
achieve organizational stability?
A long duration at first, followed by a short
duration.
A long duration.
A very limited duration.
A company should never achieve organizational
stability.
What are the two traits of corporate strategy?
Diversification and Vertical Integration
Vertical Integration and Horizontal Integration
Diversification and Horizontal Integration
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