Learn Smart 6

Question 1

The new owners of a long established clothing retailer have experience in garment manufacturing and as a result they decide to expand into that business. this type of business growth is called

Answer 1

backward vertical integration

Question 2

what is a sign that a leading firm may be vulnerable to an offensive strategy attack?

Answer 2

the firms use of ageing technology and outdated equipment

Question 3

if the face to market leadership in a particular industry is a marathon

Answer 3

there may be enough time for fast followers and late movers

Question 4

What are common objectives of merger and acquisition strategies?

Answer 4

• Expanding geographic coverage
• Extending business into new product categories
• gaining quick access to new technologies

Question 5

In a strategic alliance, a company’s proprietary knowledge and trade secrets are most vulnerable when the partnership involves

Answer 5

collaborative research and development

Question 6

what are reasons for a company to favor internet retailing?

Answer 6

• To increase brand recognition
• To lower costs for end users
• To lower distribution costs

Question 7

which statement about strategic alliances in industries experiencing rapid technological advances is true?

Answer 7

Many companies find strategic alliances an essential way to keep pace with technological change

Question 8

In industries with changing boundaries, a company may pursue an acquisition strategy in order to

Answer 8

• Be prepared t orespond to the various directions the industry might take
• Become mroe flexible in its capacity to respond to buyers’ changing needs
• Expand into new geographic regions

Question 9

A strategic alliance can be defined as a formal; agreement between two or more separate companies in which

Answer 9

the parties agree to work collaboratively toward one strategically relevant objective

Question 10

what are some of the negative effects that merger and acquisitions can have on personnel

Answer 10

-Difficulty coping with new management may lead to lower morale

• Employees may resist efforts to mesh the cultures of the two companies
• managers may make mistakes when deciding which systems to integrate

Question 11

A company that aggressively pursues and online sales strategy risks

Answer 11

-threatening crucial relationships with distribution allies

Question 12

The best strategic offensives for companies involve which of the following?

Answer 12

• Strive to convert a competitive advantage into a sustainable advantage
• Overwhelming rivals with swift and decisive action

Question 13

the term “blue ocean” refers to a market space in which

Answer 13

an industry does not yet exists and the market space is untainted by competition

Question 14

outsourcing typically ____ the scope of a business operations

Answer 14

narrows

Question 15

which statements are true about concerning horizontal scope?

Answer 15

• It can be expanded through company mergers and acquisitions
• it is the range of the product and serviced segments that a firm serves within its product and service market

Question 16

what are reasons that merger and acquisitions sometimes fail?

Answer 16

• cost savings are less than anticipated

- Gains in competitive advantage materialize more slowly than was anticipated

Question 17

T?F
for a company making a strategic move, being a fast follower or a late mover is always better in the long run than being a first mover

Answer 17

F

Question 18

Expanding along the value chain into products and services that are closer to the end user is called

Answer 18

forward vertical integration

Question 19

The drawbacks of strategic alliances include the possibility that a company will

Answer 19

• Overestimate the potential for sustaining a positive relationship
• Accidentally receal knowledge that allows a pernter to match core strengths
• Become too dependent on a partner

Question 20

which statement are true concerning vertical scope?

Answer 20

• It is defined by the range of activities that may extend from initial production to after- sale customer service.

Question 21

when should a company undertake a strategic offensive?

Answer 21

• When the company has no option other than to try to lessen a strong rivals competitive advantage
• When the company identifies a chance to improve it market share at a competitors expense

Question 22

Which statements about strategic alliances are generally true?

Answer 22

• All parties of the alliance contribute resources
• Financial responsibility is shared among all parties of the alliance
• The alliances involve mutual dependence and shared risk

Question 23

which statements concerning strategic alliances are accurate?

Answer 23

• Strategic alliances are used by companies as a way of managing outsourcing
• Strategic alliances are used by some companies to extend their scope of operations internationally

Question 24

Which statements about strategic alliances among large corporations is true?

Answer 24

• Large coporations can be well-served by managing their strategic alliance like a profolio
• It is not uncommon for large corporations to have up to 50 strategic alliances

Question 25

A business guerrilla offensive is best suited for

Answer 25

small companies that lack the capacity to launch a full strategic offensive against better established rivals

Question 26

Strategic alliances can be a viable alternative to

Answer 26

- Horizontal mergers and acquisitions - Vertical integration strategies - Traditional price-oriented contracts

Question 27

what are recommended strategies for companies that manage a large number of strategic alliances?

Answer 27

- To break relationships that have produced meager results - To continue to seek promising new alliances - To restructure alliances to optimize collaborative effort

Question 28

the benefits of forward vertical integration include

Answer 28

- Differentiating a company from its competitors - Giving manufacturers better access to end users - Improving a companys market visablility

Question 29

In some cases, backward vertical integration can increase efficiency by

Answer 29

coordinating production flows and preventing bottlenecks

Question 30

Approximately what percent of a strategic business alliances fail each year?

Answer 30

60% to 70%

Question 31

which statement about entering the supply stage of the value chain as part of a vertical integration strategy is true?

Answer 31

matching a suppliers production efficiency often requires significant investment in research and development

Question 32

Zipcar located new ares of demand for rented cars by targeting

Answer 32

people who live in urban centers and need short term rentals

Question 33

what would be an example of a firm pursuing vertical integration?

Answer 33

the owner of a poultry farm expanding into food distrisbution

Question 34

In many cases, strategic alliances are preferable to vertical integration strategies , as well as horizontal mergers and aquisitions, because strategic alliances

Answer 34

- Are more flexible and allow for swifter responses to changing market conditions - can be deployed more rapidly in attempt to gain first-mover advantages - Can lower investment costs by requiring partners to pool resources

Question 35

Companies in successful business alliances understand that collaborative arrangements should be

Answer 35

- Capable of responding to shifting market changes | - Flexible enough to keep pace with changing customer requirements

Question 36

Some companies have adopted forward vertical integration strategies to

Answer 36

- Supplement to their core product line with iconography and memorabilia - Facilitate the sale of overstocked and slow moving items - Decrease dependence on sales agents, wholesalers and retailers

Question 37

The defective approach that companies use most frequently to defend their market position is

Answer 37

to block avenues that competitors might use to launch a strategic offensive

Question 38

A company that acquires another comapny in the same industry may be able to cut costs by

Answer 38

- Combining and downsizing administrative activities | - Closing inefficient plants

Question 39

Contract-based outsourcing can introduce problems because

Answer 39

- Issues arising from delays and budget overruns may be difficult to resolve - The outside company may lack incentive to meet the needs of the outsourcing company - A company may have a difficult time monitoring the work of the outside company

Question 40

in a winner take all type of market

Answer 40

first mover advantages can insulate a company from competition

Question 41

Which statement about establishing the technical standard in an industry is true?

Answer 41

Establishing a technical standard is an experience based advantage that can grow over time

Question 42

which statements concerning strategic alliances are accurate?

Answer 42

- Strategic alliances are used by some companies to extend their scope of operations internationally - Strategic alliances are used by some companies as a way of managing outsourcing

Question 43

In a strategic alliance between companies, the decision making process should

Answer 43

-allow partners to keep pace with developments in the market

Question 44

Vertically integrated companies may face challenges realizing economies of scale because

Answer 44

- Their production levels often fall below the minimum efficient scale - The company is too small

Question 45

Comapnies that outsource strategically important run the risk of

Answer 45

weakening their ability to sustain their competitive advantage in ares vital to the company's success

Question 46

In which situation do adept followers have an advantage over first movers?

Answer 46

- When first movers products do not perform well - When imitators can achieve the same benefits as pioneers with lower costs - When market uncertainties make it difficult to predict which products will succeed.

Question 47

A merger can be defined as

Answer 47

the combining of two or more companies into a single corporate entity

Question 48

A company that expands its geographic coverage typically

Answer 48

- enhances its name recognition and brand awareness | - increase its bargaining power with suppliers and buyers

Question 49

Price cutting can be an effective strategy for companies that

Answer 49

have already achieved a cost advantage

Question 50

what are examples of ways that companies signal would be challengers that retaliation is likely ?

Answer 50

- publicly announcing a commitment to maintaining market share - Maintaining cash reserves and marketable securities to fun countermeasures

Question 51

combinded companies may be able to reduce supply chain costs because

Answer 51

expanded operating capacity may increase the companys bargaining power with suppliers

Question 52

A merger or acquisition that extends business into new product categories

Answer 52

- helps a company fill gaps in its product line | - Can be more cost effective than developing the product on its own

Question 53

when buyer preferences shift a vertically integrated company

Answer 53

may have difficulty adjusting its product lines to meet new demand

Question 54

A company can achieve which of the following by signaling would be business challengers that retalliation is likely in the event of any strategic attack?

Answer 54

- Diverting challengers to less threatening competition | - Dissuading challengers from attacking altogether

Question 55

Zipcar competes against entrenched rivals in the rental car insdustry by

Answer 55

- Keeping the cars it rents in conventialty located parking spaces - Renting cars by the hour or day to members who pay a yearly fee

Question 56

Under which of the following circumstances might backward vertical integration lower costs?

Answer 56

- When there are few suppliers in the market | - When the item being supplied is a major component of the final product

Question 57

A company that acquires another company in the same industry may be able to cut costs by

Answer 57

- Combining and downsizing administrative activities | - Closing inefficient plants

Question 58

When there are improvements in technology at the supply stage of the value chain, a vertically integrated company

Answer 58

- May need to continue producing suboptimal products rather than upgrading its technology - May be required to incur high cots for abandoning old technologies in an effort to keep pace with suppliers

Question 59

A vertically integrated firm

Answer 59

Participates in multiple stages of an industry value chain system

Question 60

first-movers are likely to experience significant advantages when

Answer 60

- Switching costs discourage a first movers customers from seeking a different vendor - Being first in a new market builds strong brand loyalty and enhances a firms reputation