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Test answers for Corporate Strategy 2016

(96) Last updated: January 22
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96 Answered Test Questions:

1. Which of the following is a Visit Cost of benchmarking?

Answers:

• travel costs

• lost labor time

• (All of these)

• hotel rooms

2. What is an example of a growth strategy a firm may pursue?

Answers:

• National growth

• Internal growth

• International expansion

• Restructuring

3. Which of the following is a potential detriment to concentration strategies?

Answers:

• The price of their stock plummeting.

• International expansion.

• 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.

4. What does it mean to integrate horizontally?

Answers:

• A corporation collaborates with its competition

• A corporation competes with its competition

• A corporation buys its competition

• A corporation defeats its competition

5. Allocating capital throughout a diverse portfolio allows corporations to achieve what objective?

Answers:

• Corporate synergy

• Corporate advantage

• Corporate synthesis

• Corporate diversification

6. What method of operation the production of standardized products that can be produced prior to receiving customer orders?

Answers:

• assemble-to-order operations

• continuious-flow operations

• make-to-stock operations

• make-to-order operations

7. Can a business strategy be interchangeable with a corporate strategy?

Answers:

• Yes. The main difference is that business strategy aspires to be corporate strategy.

• Yes. It is directly interchangeable.

• No. A corporate strategy has to focus globally, while business strategy focuses on individual units.

• Yes. One can be scaled into the other.

8. Which of the following is a economic value trait?

Answers:

• Sustainability

• Success rate

• Income

• GNP

9. What BCG Matrix strategy calls for reducing investment in a product to maximize profits and produce positive cash flows?

Answers:

• Build market share strategy

• Harvest strategy

• Hold strategy

• Divestiture strategy

10. Which of the following is generally considered the first step to implementing results-driven change?

Answers:

• Eliminating those impediments or forces that prevent change and ecourage the status quo.

• Setting measurable short-term goals to improve performance

• Soliciting input from employees on how to increase performance.

• Stressing the importance of change in the organization.

11. Why is performing a gap analysis helpful in the change process?

Answers:

• Because it helps to convince employees that the change is positive.

• Because doing so outlines the necessary steps to implement the change.

• Because it forces an organization to identify both its current and desired state of being.

• Because it forces an organization to identify those forces that need to be overcome to implement the change.

12. What are the three varieties of Vertical Integration?

Answers:

• Backward, Balanced, Horizontal

• Forward, Balanced, Horizontal

• Backward, Forward, Horizontal

• Backward, Forward, Balanced

13. What is corporate governance framework?

Answers:

• Corporate governance framework defines the rules and practices necessary for strategic advancement.

• Corporate governance framework defines the federal regulations and practices necessary for ethical compliance.

• Corporate governance framework defines the rules and practices necessary for ethical compliance.

• Corporate governance framework dictates the rules and practices necessary for environmental compliance.

14. How should a corporation structure itself in order to maximize its abilities to execute a strategy?

Answers:

• A corporation should be decentralized and flexible

• Centralized and flexible

• Static and dynamic

• Static and flexible

15. Which of the following statements best describes corporate strategy?

Answers:

• How a company allocates resoures across different businesses.

• How a company creates value across different businesses.

• How a company organizes itself.

• How a company manages a diversified portfolio of products.

16. According to Michael Porter's five forces, what is the impact of increased buyer power?

Answers:

• Consolidation among established organizations as they look to increase control over prices.

• Increased number of new entrants into the market.

• Reduced business profitability as buyers exert downward pressure on prices.

• Increased product differentiation as organizations look to other ways to maintain control over prices.

17. 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?

Answers:

• Introduction

• Growth

• Decline

• Maturity

18. What activity must come first in the performance management process?

Answers:

• Specifying the relevant aspects of performance.

• Identifying behaviors that lead to increased performance

• Appraising performance.

• Providing performance feedback.

19. Which of the following is an example of a retrenchment strategy?

Answers:

• Google investing in the expansion of fiber networks to build its broadboard services offerings.

• Amazon redesigning its website to better accomodate mobile users.

• Delta airlines reducing flights to several areas of the United States.

• Facebook purchasing popular photo-sharing service Instagram.

20. 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?

Answers:

• horizontal merger

• divestiture

• vertical merger

• conglomerate merger

21. Which of the following is not considered a corporate growth strategy?

Answers:

• Diversification

• International expansion

• Concentration

• Analytical expansion

22. What benefit would diversification pose for a company such as BP?

Answers:

• It allows them to sell their primary product in a different market

• It allows them the opportunity to restructure their core

• It allows them to sell different products within their core market

• It allows a secondary profit channel in the case its main product becomes undesirable

23. What major disadvantage can a firm encounter with related diversification?

Answers:

• Difficulty in managing new products

• Difficulty in managing single business units

• Difficulty in managing different, but related businesses

• Difficulty in managing new personnel

24. Vertical integration provides what benefit to a firm?

Answers:

• Decrease in waste

• Increase in expansion capabilities

• Increase in personnel

• Reduced purchasing and selling costs

25. What are two methods of implementing growth strategies?

Answers:

• Insolvency and synergy

• Mergers and acquisitions

• Diversification and concentration

• Concentration and liquidation

26. Which of the following is not a step to the performance management cycle?

Answers:

• evaluating performance

• establishing incentives

• providing feedback

• setting performance expectations

27. What is financing derived from the sale of common stock or from retained earnings?

Answers:

• equity financing

• debt financing

• stock financing

• leverage financing

28. What is total quality management (TQM)?

Answers:

• A strategy focused on decreasing the number of defective products.

• A management approach focused on customer focus, continuous improvement, and teamwork.

• A technique used to increase the rate or production.

• A philosophy for decreasing the number of one-the-job accidents.

29. 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?

Answers:

• differentiation strategy

• cost leadership strategy

• focus strategy

• firm level strategy

30. In 2014, Google announced that it was selling Motorola Mobility to Lenovo for roughly $2.91 billion. What is this an example of?

Answers:

• spin-off

• divestiture

• carve-out

• retrenchment

31. Which of the following is a potential detriment that vertical integration causes?

Answers:

• Increase in globalization and a reduction in flexibility

• Increase in expansion and an increase in flexibility

• Increase in centralization and an increase in flexibility

• Increase in centralization and a reduction in flexibility

32. What legal issue could potentially arise as a result of horizontal integration strategies?

Answers:

• Trademark infringement

• Patent violations

• Antitrust violations

• Copyright violations

33. What are products that occupy the low market share and low growth quadrant of the BCG Matrix called?

Answers:

• Cash cows

• Stars

• Question marks

• Dogs

34. True or False? Operational Management focuses on the responses of external market issues.

Answers:

• False

• True

35. Why are products identified as 'question marks' in the BCG Matrix challenging for management?

Answers:

• They possess significicant market share and management may not have the resources to leverage them.

• They are unprofitable.

• They could develop into 'stars', but they can also turn into 'dogs'.

• They possess low market growth and thus have limited potential.

36. What is the difference between earnings per share and diluted earnings per share?

Answers:

• Earnings per share includes the stock options of employees.

• Diluted earnings per share includes outstanding common stock and all convertible securities.

• Earnings per share includes warrants and convertible securites.

• Diluted earnings per share does not assume all convertible securities are exercised.

37. What is the purpose of the poison pill?

Answers:

• To increase long-term profitability.

• To make the corporation appear more attractive to a prospective buyer.

• To prevent a hostile takeover.

• To provide instant profits to investors.

38. What is the main difference between corporate and business strategy?

Answers:

• Business strategy focuses on individual business units, while corporate strategy focuses on the overall direction a corporation must take

• There is no difference in the two

• 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

39. Why would a corporation choose to focus on related diversification?

Answers:

• Related diversification allows a company to diversify and share facilities and resources to reduce costs

• Related diversification poses no benefit because the company has already dominated the market it is in

• A company cannot utilize related diversification as a strategy because it is redundant to use similar facilities to produce their products

• Related diversification allows a company to expand into exactly the same market it is in

40. 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?

Answers:

• By increasing restraining forces and holding driving forces constant.

• By increasing restraining forces and decreasing driving forces.

• By increasing or holding constant driving forces and decreasing restraining forces.

• By increasing driving forces and restraining forces.

41. Which of the following is NOT an example of a corporate social responsibility activity?

Answers:

• Offering employees flexible working arrangements to balance work and family responsibilities.

• Using recylced paper cups as opposed to cups composed of polystyrene.

• Donating unsold or obsolte prodcuts to local non-profit organizations.

• Increasing short-term profitability by extending the life cycle of equipment past the recommended period.

42. 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?

Answers:

• A hostile takeover

• An acquisition

• A leveraged buyout

• A merger

43. Which of the following best categorizes individuals or groups who have an interest in the actions of an organizations?

Answers:

• Investors

• Stakeholders

• Stockholders

• Shareholders

44. What is the term used to describe a statement that oulines what a company does and its reason for existing?

Answers:

• Vision statement

• Operating statement

• Core value statement

• Mission statement

45. What is the process where one company purchases another and absorbs it into its existing operations?

Answers:

• divestiture

• acquisition

• liquidation

• merger

46. Of the following, which is a potential course of action in the event of a catastrophic failure in growth strategies?

Answers:

• Diversification

• Concentration

• Expansion

• Corporate restructuring

47. Performance benchmarking let's a firm:

Answers:

• compare its overall productivity.

• assess its competitive position compared to target/peer firms.

• compare its efficiency.

48. What is the term used to describe a broad vision that outlines where a company wants to go?

Answers:

• Operational plan

• Core value statement

• Stategic plan

• Tactical plan

49. How can corporations use executive compensation to focus management decision making on goals that are important to shareholders?

Answers:

• Include a non-compete provision.

• Include a golden handcuff provision.

• Include a stock option grant provision.

• Include a golden parachute provision.

50. Which of the following costs of inventory production is associated with storing products until they are to used or sold?

Answers:

• holding cost

• ordering cost

• stockout cost

• setup cost

51. True or False? Corporate strategy deals with industries the firm seeks to compete in.

Answers:

• False

• True

52. Concentration strategy is when a corporation does what?

Answers:

• Focuses on acquiring other businesses

• Focuses on its primary line of business

• Focuses on strategies to expand internationally

• Concentrates on a diverse portfolio

53. What role does corporate governance framework play in corporate strategy?

Answers:

• Corporate governance framework ensures that corporate strategies are pursued with financial gain as their only objective

• Corporate governance framework plays no role in corporate strategy

• Corporate governance framework ensures that corporate strategies are pursued ethically

• Corporate governance framework ensures that corporate strategies are leveraged purely for self interest

54. When diversifying, what must be kept in tact to maintain the survival of the firm?

Answers:

• The integrity of the staff

• The retention rate of the staff

• The retention rate of customers

• A companies sustainable competitive advantage

55. Why would a firm use diversification as a strategy?

Answers:

• Diversification offers a firm the opportunity to compete in unknown markets

• undervalued assets or is in financial distress

• Diversification offers a company the opportunity to expand beyond its core business

• Diversification allows a company to focus more on its core business functions

56. Which of the following best describes the stakeholder approach to social responsibility?

Answers:

• Organizations should consider primarily the interests of their shareholders.

• Organizations should consider the intersts of only employees, investors, and customers when making decisions.

• Organizations should consider solely the impact their decision will have on profits.

• Organizations should consider the interests of all parties who have the potential of being affected by a decision.

57. What company-wide message is delivered to describe a corporation's reason to exist?

Answers:

• Mission Statement

• Slogan

• Marketing strategy

• Motto

58. What is organizational stability?

Answers:

• Organizational stability is when a firm acquires another business

• Organizational stability is when a firm expands its size

• Organizational stability is when a firm maintains its current size

• Organizational stability is when a firm diversifies its market

59. Which of the following is a business function of the value chain?

Answers:

• (All of these)

• Research and Development

• Marketing and Sales

• Production

60. What is an example of a long-term consideration of a strategic corporation?

Answers:

• Quarterly earnings

• Annual performance

• Future market entry, and mergers and acquisitions

• Quarterly sales objectives

61. What is an example of a benefit gained from corporate governance framework?

Answers:

• A decrease in environmental concerns that allows companies to earn more profits

• 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

• Increased revenues and stock options

62. An acquisition is the outright purchase of another company. What is a merger?

Answers:

• A merger takes place when one company buys another company.

• 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 is a legal transaction that takes place when two or more organizations unite through an exchange of stock.

63. True or False? The Business Process Improvement system is an approach to help a company achieve efficient results.

Answers:

• True

• False

64. True or False? Benchmarking is comparing a firm's business metrics to the industry's bests.

Answers:

• False

• True

65. Which one of the following are Porter's generic strategies

Answers:

• (All of these)

• Cost Leadership

• Segmentation Strategy

• Differentiation Strategy

66. What is a characteristic of a firm that is ideal for diversification?

Answers:

• A firm that is deeply in debt

• A firm who recently began selling public stock

• A firm that is earning enough to break even

• A firm that has the excess resources and capabilities to expand profitability

67. What is inventory turnover?

Answers:

• The number of days required to sell through a company's average inventory.

• The dollar value of the inventory sold within 30 days.

• Inventory that is stolen, damaged, or returned as defective.

• The number of times annually that a company sells its average inventory.

68. When growth is vertical, what does this mean for a corporation?

Answers:

• 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

69. Which of the following is not considered to be a level of strategy in an organization?

Answers:

• strategic business unit strategy

• corporate stategy

• operational strategy

• functional strategy

70. There are two major types of diversification. What are they?

Answers:

• National and international

• Related and unrelated

• Strategic and non-strategic

• Static and dynamic

71. Which error in decision-making typically results when managers have already devoted significant resources to a project but have yet to see financial results?

Answers:

• escalation of commitment

• illusions of control

• prior hypothesis bias

• recency bias

72. What kind of outlook would make organizational stability a prudent action?

Answers:

• A future with diversification planned

• An uncertain future

• A strong future

• A future anticipating a series of buyouts

73. Which of the following is true regarding the impact of diversification on an organization's performance?

Answers:

• 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.

• An organization's performance generally decreases as it shifts from a related diversification strategy to an unrelated diversification strategy.

74. With the inherent risk involved, why would a company choose unrelated diversification as a strategy?

Answers:

• A firm targeted for acquisition has undervalued assets, or is in financial distress

• 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

75. The Heptalysis Analysis is an early stage business/venture analysis using how many categories?

Answers:

• 4

• 7

• 8

• 5

76. What does the L stand for in the PESTLE Analysis?

Answers:

• Liability

• Law

• Loss

• Legal

77. A firm replacing suppliers is vertically integrating ________________.

Answers:

• Downstream

• Balanced

• Horizontal

• Upstream

78. Which of the following is not a component to managing performance through management by objectives (MBO)?

Answers:

• Managers and employees working together to set mutually agreeable goals.

• Managers monitor progress and provide feedback during the assessment period.

• Establishing specific, difficult, and objectives goals.

• Agreeing on rewards that are likely to increase employee motivation.

79. True or False? NACIS is a measurement of diversification.

Answers:

• True

• False

80. Which of the following is part of John Kay's value chain concept?

Answers:

• Market focus

• Product differentiation

• Innovation

• Cost minimization

81. Which of the following is not a major perspective of the balanced scorecard?

Answers:

• employee performance indicators

• business process indicators

• financial

• customer service indicators

82. What is an example of horizontal integration?

Answers:

• 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

83. 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?

Answers:

• low-cost strategy

• market penetration strategy

• loss leader strategy

• value chain strategy

84. 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?

Answers:

• Chief executive officers must now sign off financial results.

• Chief financial officers now report directly to the board of directors.

• Internal corporate auditors must now review all financial reports generates by corporate accountants.

• The increased role of the corporate internal auditor.

85. Which of the following barriers to change can be overcome by involving affects parties in the change process as closely as possible?

Answers:

• excessive focus on costs

• failure to perceive benefits

• fear of loss

• organizational politics

86. When a firm engages in unrelated diversification, what kind of market are they expanding into?

Answers:

• 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

• A market without a strategic fit or theme

87. What type of strategy attempts to answer the question: "How should we compete against a particular organization?"

Answers:

• positioning strategy

• firm level strategy

• industry level strategy

• corporate strategy

88. What does the M stand for in the MOST Business Analysis?

Answers:

• Matrix

• Margin

• Mission

• Market

89. Which of the following is not a social factor of the PEST analysis?

Answers:

• Safety

• Career Attitudes

• Population growth rate

• Economic growth

90. 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?

Answers:

• Working closely with suppliers and even requesting suppliers to locate near distribution centers.

• Decreasing product development cycles.

• Using automation to perform certain tasks.

• Increasing customer responsiveness.

91. Of the following, which would benefit most from corporate strategy?

Answers:

• Kraft General Foods

• Wrigley

• Coca-Cola

• New Belgium Brewing

92. When a firm engages in product-market exploration strategies, how is its focus shifting?

Answers:

• The firm is focusing primarily on its current products and their current markets

• The firm is focusing on developing new products and entering new markets

• The firm is expanding internationally

• The firm is focusing on hostile takeovers

93. How many steps are there in the business process improvement analysis?

Answers:

• 6

• 5

• 8

• 7

94. What duration should a firm undertake to achieve organizational stability?

Answers:

• A long duration.

• A very limited duration.

• A company should never achieve organizational stability.

• A long duration at first, followed by a short duration.

95. What are the two traits of corporate strategy?

Answers:

• Diversification and Vertical Integration

• Diversification and Horizontal Integration

• Vertical Integration and Horizontal Integration

96. What is a competitive advantage?

Answers:

• Something that allows an organization to achieve sales revenues that are greater than the industry average.

• 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.

• Something that allows an organization acess to greater market share.