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Question
Acquisition of an existing business is an attractive strategy option for entering a promising new industry because it:A. is an effective way to hurdle entry barriers, is usually quicker than trying to launch a brand-new startup operation, and allows the acquirer to move directly to the task of building a strong position in the target industry.
B. is less expensive than launching a new startup operation, thus passing the cost-of-entry test.
C. offers a challenging opportunity to train new resources and revive a sagging business even if does not offer great prospects for growth, profitability, or return on investment.
D. is more likely to result in passing the shareholder value test, the profitability test, and the better-off test.
E. offers the prospect of gaining an immediate competitive advantage in the new industry and thus helps ensure that the diversification move will pass the competitive advantage test for building shareholder value.
Answer
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Related questions
Q:
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.
Q:
In a strong-culture company:A. values and behavioral norms are like crabgrassdeeply rooted and hard to weed out.B. there is wide support for high ethical standards among both managers and employees.C. a company has more strategy flexibility because it can change its strategy and be confident that the culture will welcome the strategy changes and be an ally in implementing whatever changes are called for.D. there is little room for employee empowerment, because independent-thinking empowered employees may well make decisions or engage in actions that weaken the culture.E. management insists that official policies and procedures be followed religiously.
Q:
Which of the following is NOT a tool or method that managers can use to promote operating excellence and further the cause of good strategy execution?
A. Benchmarking
B. Business process reengineering
C. Strategic resource training
D. TQM and Six Sigma quality control techniques
E. Best practices
Q:
The backbone of the process of identifying, studying, and implementing best practices is:
A. business process reengineering
B. a corporate culture that has a core value of operating excellence
C. benchmarking
D. Six Sigma quality control techniques
E. the innovative application of TQM techniques
Q:
Prescribing policies and operating procedures aids the task of implementing strategy by:
A. helping ensure that worker eligibility for incentive bonuses is measured consistently and awarded fairly.
B. fostering the use of best practices, TQM, Six Sigma, and continuous improvement efforts.
C. acting as a powerful lever for changing employee attitudes about the need for a different incentive and reward system.
D. helping build employee commitment to strengthening the company's core competencies and competitive capabilities.
E. placing limits on ineffective independent action and channelling efforts of individuals along a path more conducive to good strategy execution and operating excellence.
Q:
Cavco Construction divests funds from its commercial property ventures to invest in gated community properties close to New York, signaling a change of strategy. Which of the following statements about Cavco is most likely true?
A. Cavco is impeding the efforts to proficiently execute the strategy.
B. Cavco is merely fine-tuning its existing strategy to test efficiency.
C. Cavco is marshalling resources to support new strategic initiative.
D. Cavco is hampering work climate conducive for good strategy execution.
E. Cavco is focusing on activities that are a low priority in the strategy execution effort.
Q:
Kimberly-Clark, the manufacturer of Kleenex tissues and Huggies diapers, streamlines its healthcare business by listing Halyard Health as a separately traded company. The company's move is likely to:
A. promote healthcare wings of rival companies.
B. increase the cost of manufacturing medical devices.
C. curtail the cost of manufacturing medical devices.
D. enhance the strategy execution capabilities of the company.
E. increase the demand for personal protective equipment.
Q:
A company's operating budget must:
A. be strategy-driven in order to amply fund the performance of key value chain activities.
B. be risk-averse, so as not to run the risk of inadvertently creating barriers to building the needed competencies and capabilities.
C. be employee-driven to gain commitment to strengthening the company's core competencies and competitive capabilities.
D. trim costs of key value chain activities to achieve cost efficiency in new strategic initiatives.
E. follow traditional and time-tested methods of budgeting to support rapid adjustments in strategy.
Q:
Visible actions to reallocate operating funds and move people into different and new organizational units:A. can be dysfunctional in trying to implement a new strategy because of the anxiety and insecurity that big changes in budgets cause among company personnel.B. signal a determined commitment to strategic change and can help catalyze and give credibility to the implementation process.C. run the risk of inadvertently creating barriers to building the needed competencies and capabilities.D. tend to impede the task of empowering employees and shifting to a new, more strategy-supportive culture.E. are rarely necessary in implementing a new strategy unless the new strategy entails a radically different set of value chain activities.
Q:
Core competencies and competitive capabilities are usually:A. lodged in the narrow skills and specialized work efforts of a single department, as opposed to the combined expertise and capabilities of specialists scattered across several departments.B. observed to stem from collaborative efforts with strategic allies.C. bundles of skills and know-how that most often grow out of the collaborative efforts of cross-functional work groups and departments performing complementary activities at different locations in a firm's value chain.D. found to result in competitive advantage when they involve highly specific technologies and are grounded in a company's own deep technical expertise.E. built rapidly, usually in conjunction with important product innovations.
Q:
Which of the following is TRUE of the capability building process?
A. It requires two things: (1) developing the ability to do something, however imperfectly or inefficiently, and (2) molding these efforts into an organizational ability and as experience grows and personnel perform the activity consistently well and at an acceptable cost, it is transformed into a tried-and-true competence and as they continue to polish and refine their know-how into further improvements, they then create a real competitive capability.
B. It entails (1) deciding which value chain activities to perform internally and which ones to outsource; and (2) deciding how much authority to centralize at the top and how much to delegate to down-the-line managers and employees.
C. It is essential (1) when the company does not have the ability to create the needed capability internally (perhaps because it is too far afield from its existing capabilities), and (2) when industry conditions, technology, or competitors are moving at such a rapid clip that time is of the essence.
D. It involves (1) staffing the organization with people capable of executing the strategy well, (2) developing the resources and building the organizational capabilities needed for successful strategy execution, and (3) creating an organizational structure supportive of the strategy execution process.
E. It must (1) supplement the design with appropriate coordinating mechanisms, and (2) institute whatever networking and communications arrangements are necessary to support effective execution of the firm's strategy.
Q:
In companies where intellectual capital is crucial to good strategy execution, which of the following is generally NOT among the practices companies use to establish a talented knowledge base?
A. Providing promising employees with challenging, interesting, and skill-stretching assignments and also rotating them through jobs that not only have great content but also span functional and geographic boundaries
B. Providing employees promotions, salary increases, performance bonuses, stock options, and other perks
C. Coaching underperformers and benchwarmers to improve their skills and capabilities
D. Encouraging employees to challenge existing ways of doing things, to be creative and innovative in proposing better ways of operating, and to push their ideas for new products or businesses
E. Fostering a stimulating and engaging work environment such that employees will consider the company a great place to work
Q:
Which of the following is NOT true of implementing a strategy?
A. It is critical to ensure strategy-supportive resources and capabilities are in place.
B. The level of personnel competence is irrelevant to proficient strategy execution.
C. It is important to assemble a strong management team.
D. Strengthening the firm's core competencies is a top priority.
E. A poorly structured organization can lead to higher bureaucratic costs.
Q:
Management's handling of the strategy implementation/execution process can be considered successful:
A. when the internal organization develops two or more core competencies in performing value chain activities.
B. if and when the company meets or beats its performance targets and shows good progress in achieving its strategic vision for the company.
C. if the company's culture is strong and strategy-supportive.
D. if management is able to marshal adequate resources to put the strategy in place within 6 to 12 months.
E. if managers and employees express strong support for the company's strategy and long-term direction.
Q:
Identify and briefly discuss the key reasons why a company may consider expanding outside its domestic market.
Q:
What is it called when a company sells its goods in foreign markets at prices that are below the prices at which it normally sells in its home market or well below its full costs per unit?
A. Dumping practices
B. Price-clearing system
C. Clearance sale
D. Discounting practices
E. Competitive advantage
Q:
Companies that compete on an international basis have a competitive advantage over their purely domestic rivals:
A. to achieve a larger domestic interest by developing sufficient resource strengths and competitive capabilities for success.
B. to benefit from coordinating activities across different countries' domains.
C. solely for the benefit of their shareholders.
D. that guarantees the generation of big profits, big returns on investment, and big cash surpluses after dividends are paid.
E. to give full access to the proprietary technological expertise or other competitively valuable capabilities.
Q:
A key approach for a company to grow sales and profits in several country markets is to:
A. transfer its valuable competencies and resource strengths among these markets to aid in the development of broader competencies and capabilities.
B. employ a multidomestic strategy rather than a global strategy.
C. locate technical after-sale services close to buyers.
D. minimize transportation costs among these markets.
E. take advantage of less restrictive restrictions and requirements of host governments.
Q:
Companies that compete internationally can pursue competitive advantage in world markets(or offset domestic disadvantages) by:
A. using a differentiation-based competitive strategy in those country markets with superior resources.
B. choosing not to compete in countries with high tariffs and high taxes (which then have to be passed along to buyers in the form of higher prices), thus keeping costs and prices lower than rivals.
C. using an export strategy to circumvent the risks of adverse exchange rate fluctuations.
D. locating value chain activities in whatever nations prove most advantageous in a manner that uses location to lower costs or achieve greater product differentiation, allow for the transfer of competitively valuable competencies and capabilities from one country to another, and allow for cross-border coordination.
E. employing a multidomestic strategy instead of a global strategy.
Q:
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.
Q:
Which of the following does NOT accurately characterize the differences between a localized multidomestic strategy and a global strategy?
A. A global strategy entails extensive strategy coordination across countries and a multidomestic strategy entails little or no strategy coordination across countries.
B. A global strategy often entails use of the best suppliers from anywhere in the world, whereas a multidomestic strategy may entail fairly extensive use of local suppliers (especially where use of local sources is required by host governments).
C. A global strategy tends to involve use of similar distribution and marketing approaches worldwide, whereas a multidomestic strategy often entails adapting distribution and marketing to local customs and the culture of each country.
D. A global strategy involves striving to be the global low-cost provider by economically producing and marketing a mostly standardized product worldwide, whereas a multidomestic strategy entails pursuing broad differentiation and striving to strongly differentiate its products in one country from the products it sells in other countries.
E. A global strategy relies upon the same technologies, competencies, and capabilities worldwide, whereas a multidomestic strategy often entails the use of somewhat different technologies, competencies, and capabilities as may be needed to accommodate local buyer tastes, cultural traditions, and market conditions.
Q:
What is the best way to achieve the efficiency potential of a global strategy?
A. It demands managerial attention to be focused on objective-setting specifically oriented toward production practices.
B. It requires that resources and best practices be shared, value chain activities be integrated, and capabilities be transferred from one location to another as they are developed.
C. It requires that the best identified resources and capabilities be centralized at headquarters.
D. It requires value chain activities to be dispersed across many countries to elevate cost control management as a primary focus in all countries.
E. It requires giving local managers considerable latitude for executing strategies for the country markets they are responsible for.
Q:
A think-global, act-global strategic theme puts emphasis on:
A. executing a global domination strategy that focuses the company's resource strengths on entry strategies across all country boundaries.
B. ensuring that value chain activities are defined by country-specific attributes to capitalize on economies of scale.
C. building a global brand name and aggressively pursuing opportunities to transfer ideas, products, and capabilities from one country to another.
D. elevating resources and capabilities developed on a country-by-country basis so as to capitalize on a country's uniqueness.
E. implementing mass-customization techniques that can address local preferences efficiently.
Q:
A global strategy allows for:
A. the leading companies to compete for the biggest share of the world market, but only occasionally compete head-to-head in different countries.
B. the markets in various countries to be part of the world market and competitive conditions across country markets to be strongly linked.
C. a company's overall market strength to be the sum of its market shares in each country market where it has a presence.
D. the industry leaders to be foreign companies, while domestic companies are relegated to runner-up status.
E. a firm's overall competitive advantage to be determined by the size of the competitive advantage it has in each of its profit sanctuaries.
Q:
A "think local, act local" multidomestic strategy works particularly well in all of the following situations, EXCEPT when there are:
A. regulations enacted by the host governments requiring that products sold locally meet strictly defined manufacturing specifications or performance standards.
B. significant country-to-country differences in customer preferences and buying habits.
C. diverse and complicated trade restrictions of host governments preclude the use of a uniform strategy from country-to-country.
D. significant country-to-country differences in distribution channels and marketing methods.
E. large demands to pursue conflicting objectives simultaneously.
Q:
What is the foremost strategic issue that must be addressed by firms when operating in two or more foreign markets?
A. Deciding on the degree to vary its competitive approach to fit the specific market conditions and buyer preferences in each host country
B. Deciding on the appropriate level of sustainable profitability
C. Deciding on the relative cost competitiveness of the home country
D. Deciding on the degree of globalization to maintain expansion capabilities
E. Deciding on the resources and capabilities of allies
Q:
Which of the following is a condition that makes an internal startup strategy appealing over an acquisition?
A. When an internal startup is more costly.
B. When an internal startup affects the supply-demand balance by increasing production capacity
C. When an internal startup is unable to gain distribution access advantages
D. When an internal startup has the necessary scale and resource strengths to compete with rivals
E. When an internal startup lacks the experience in establishing new subsidiaries
Q:
Companies operating in an international marketplace have to respond to all of the following, EXCEPT:
A. whether to customize their offerings in each different country market to match the tastes and preferences of local buyers.
B. whether to pursue a strategy of offering a mostly standardized product worldwide.
C. how much to customize their offerings in each different country market to match the tastes and preferences of local buyers.
D. the tensions between market pressures to localize a company's product offerings country by country and the competitive pressures to lower costs through greater product customization.
E. whether to buy a struggling competitor at a bargain price or pay a premium to gain entry to the local market.
Q:
Which of the following exemplifies cross-country differences in demographic, cultural, and market conditions?
A. Nike produces its own line of skate shoes.
B. Starbucks acquires a large coffee farm in Costa Rica.
C. Ireland provides low-costs loans to foreign entrants to stimulate capital investment.
D. Intel's silicon chips are identical across the world.
E. McDonald's offers 100% beef-free products in its outlets in India.
Q:
Which of the following statements about fluctuating exchange rates and the related effects on companies competing in foreign markets is true?
A. Fluctuating exchange rates pose significant risks to a company's competitiveness in foreign markets.
B. The advantages of manufacturing goods in a particular country are largely unaffected by fluctuating exchange rates.
C. Companies that are manufacturing goods in a particular country and are exporting much of what they produce lose out when that country's currency grows weaker relative to the currencies of the countries that the goods are being exported to.
D. The advantages of manufacturing goods in a particular country improve when that country's currency grows stronger relative to the currencies of the countries where the output is being sold.
E. Domestic companies under pressure from lower-cost imports are hurt even more when their government's currency grows weaker in relation to the currencies of the countries where the imported goods are being made.