ch 6 Flashcards
T\F: Long-term objectives represent the results expected from pursuing certain strategies
T
T\F: Objectives provide direction and allow for organizational synergy
T
T\F: Strategic objectives include those associated with growth in revenues, growth in earnings,
higher dividends, larger profit margins, and improved cash flow
F
T\F: Strategic objectives include larger market share, quicker on-time delivery than rivals, shorter
design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than
rivals.
T
T\F: “If it ain’t broke, don’t fix it” refers to managing by crisis
F
T\F: The overall aim of the Balanced Scorecard is to balance financial objectives with strategic
objectives.
F
T\F: Since a combination strategy bears no risk, many organizations pursue a combination of two
or more strategies simultaneously.
F
T\F: Horizontal integration is seeking ownership or increased control over competitors
T
T\F: Divestiture is selling all of a company’s assets, in parts, for their tangible worth.
F
T\F: A chief executive officer is located in the divisional level of a large firm.
F
T\F: Gaining ownership or increased control over distributors or retailers is called forward
integration strategy.
T
T\F: Franchising is an effective means of implementing forward integration
T
T\F: A growing trend is for franchisers to buy out their part of the business from their franchisees.
F
T\F: McDonalds currently owns more than 50 percent of its restaurants.
F
T\F: Forward integration strategy is especially effective when the availability of quality
distributors is so limited as to offer a competitive advantage to those firms that integrate forward.
T
T\F:A strategy of seeking ownership or increased control of a firm’s suppliers is backward
integration.
T
T\F: If a firm’s present suppliers are expensive and unreliable in meeting the firm’s needs for
parts, components, and/or raw materials, the firm should pursue a horizontal integration strategy.
F
T\F: Horizontal integration is an appropriate strategy when the competitors of an organization are
doing poorly
F
T\F: Market penetration, market development, and product development are intensive strategies
T
T\F: When the correlation between dollar sales and dollar marketing expenditures has historically
been low, market penetration is an appropriate strategy
F
T\F: Market development includes introducing present products into new geographic areas.
T
T\F: An appropriate strategy when an organization has excess production capacity is market
development
T
T\F: PepsiCo is the largest food-and-beverage firm in Russia.
T
T\F: Product development is a strategy that seeks increased sales by improving or modifying
present products or services
T
T\F: Product development is an appropriate strategy when an organization has successful products
that are in the maturity stage of the product life cycle.
T
T\F: There are four basic types of diversification: concentric, conglomerate, forward, and
backward
F
T\F: Most companies favor related diversification strategies in order to exploit common use of a
well-known brand name
T
T\F: Diversification strategies are becoming more popular as organizations are finding it easier to
manage diverse business activities.
F
T\F: The acquisition of security-software company McAfee by Intel Corp. is an example of
related diversification
T
T\F: Unrelated diversification is an appropriate strategy when an organization’s present channels of distribution can be used to market the new products to current customers.
T
T\F: Deutsche Bank’s entrance into the casino business in Las Vegas is an example of related
diversification.
F
T\F: Unrelated diversification may be an especially effective strategy when an organization’s
basic industry is experiencing increasing annual sales and profits.
F
T\F: Retrenchment and turnaround are the same strategy
T
T\F: Although bankruptcy can be an effective type of retrenchment strategy, it does not allow
firms to avoid major debt obligations and to void union contracts.
F
T\F: Chapter 7 bankruptcy is a liquidation procedure used only when a firm sees no hope of being
able to operate successfully or to obtain necessary creditor agreement
T
T\F: Chapter 9 bankruptcy applies to municipalities.
T
T\F: Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations
F
T\F: There were only 106 public U.S. companies filing bankruptcy in 2010, less than half the 211
public firms that filed the prior year
T
T\F: Divestiture is the selling of all of a company’s assets, in parts, for their tangible worth.
F
T\F: Divestiture has become a popular strategy for firms to focus on their core business and become more diversified.
F
T\F: Liquidation is often appropriate when retrenchment and divestiture have failed
T
T\F: According to Porter, strategies allow organizations to gain competitive advantage from three
different bases: cost leadership, differentiation, and decentralization.
F
T\F: For consumers who are price-sensitive, cost leadership emphasizes producing standardized
products at a very low per-unit cost
T
T\F: A best-value strategy offers products or services to a wide range of customers at the best
price-value available on the market.
T
T\F: A low-cost focus strategy offers products or services to a small range of customers at the
lowest price available on the market.
T
T\F: Jiffy Lube International would be a good example of a firm seeking the best-value focus
strategy.
F
T\F: A cost leadership strategy can be especially effective when most buyers use the product in
the same ways
T
T\F: A differentiation strategy can only be achieved with a large target market.
F
