True/False
Long-Term Objectives
1. Long-term objectives represent the results expected from pursuing certain strategies.
2. Objectives provide direction and allow for organizational synergy.
3. “If it ain’t broke, don’t fix it” refers to managing by crisis.
4. Strategic objectives include ones such as larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals.
5. Many organizations pursue a combination of two or more strategies simultaneously since a combination strategy is not risky, even if carried too far.
6. A chief executive officer is located in the divisional level of a large firm.
7. The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.
Integration Strategies
8. Gaining ownership or increased control over distributors or retailers is called backward integration strategy.
9. Franchising is an effective means of implementing forward integration.
10. A growing trend is for franchisees to buy out their part of the business from their franchiser.
11. 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.
12. A strategy of seeking ownership or increased control of a firm’s supplier is backward integration.
13. If a firm’s present suppliers are expensive and unreliable in meeting the firm’s needs for parts, components and/or raw materials, it should pursue a horizontal integration strategy.
14. Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly.
Intensive Strategies
15. Market penetration, market development, product development and joint venture are included in intensive strategies.
16. When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy.
17. Introducing present products into new geographic areas is market development.
18. A market development strategy can be increasing advertising expenditures.
19. Product development is a strategy that seeks increased sales by improving or modifying present products or services.
20. An appropriate strategy when an organization has excess production capacity is market development.
21. Product development is an appropriate strategy when an organization has successful products that are in the maturity stage of the product life cycle.
Diversification Strategies
22. There are four basic types of diversification: concentric, conglomerate, forward and backward.
23. Conglomerate diversification is the adding of new unrelated products and services for present customers.
24. Concentric diversification strategy is effective when an organization has a weak management team.
25. An appropriate strategy when an organization’s present channels of distribution can be used to market the new products to current customers is horizontal diversification.
26. An appropriate strategy when an organization’s basic industry is experiencing declining annual sales and profits is conglomerate diversification.
Defensive Strategies
27. Retrenchment and turnaround are the same strategy.
28. Among all bankruptcy filings in 2002, consumer bankruptcies comprised the overwhelming majority compared to personal bankruptcies
29. 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.
30. With bankruptcy, a firm can void union contracts.
31. Chapter 9 bankruptcy applies to municipalities.
32. Chapter 13 bankruptcy is similar to Chapter 11, but available only to large corporations.
33. Divestiture is the selling of land a firm owns.
34. Liquidation is often appropriate when retrenchment and divestiture have failed.
Michael Porter’s Generic Strategies
35. According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation and integration.
36. For consumers who are price sensitive, cost leadership emphasizes producing standardized products at very low per-unit cost.
37. The unique product may not be valued highly enough by consumers to justify the higher price with a differentiation strategy, which is a risk.
Means for Achieving Strategies
38. Cooperative arrangements and joint ventures between competitors are becoming popular.
39. A major reason why firms are using partnering as a means to achieve strategies is domestication.
40. Joint ventures tend to fail when managers who must collaborate daily in operating the venture are not involved in forming or shaping the venture.
41. An appropriate strategy would be divestiture when a need exists to introduce a new technology quickly.
Merger/Acquisition
42. An acquisition occurs when a large organization purchases a smaller one or vice versa.
43. When an acquisition or merger is not desired by both parties, it is called a takeover or hostile takeover.
44. A leveraged buyout occurs when a firm’s management and other private investors using borrowed funds buy out the firm’s shareholders.
45. First mover advantage refers to the benefits a firm may achieve by entering a new market or developing a new product or service prior to rival firms.
46. Companies are avoiding outsourcing more and more because it is more expensive than traditional methods and it does no’t allow a firm to concentrate on core competencies.
