question

Which of the following are strategy options for entering foreign markets?

answer

All of these.

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Diversifying into new businesses can be considered a success only if it

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builds shareholder value.

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A "think global, act global" approach to crafting a global strategy involves

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All of these.

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In analyzing the nine-cell matrix, those businesses in the three cells in the lower right corner of the matrix

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are destined for squeezing out the maximum cash flows.

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In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

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When a company has competitively superior patented technology that it can license to foreign partners

question

A joint venture is an attractive way for a company to enter a new industry when

answer

a firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps.

question

Which of the following is not generally something that ought to be considered in evaluating the attractiveness of a diversified company's business makeup?

answer

The frequency with which strategic alliances and collaborative partnerships are used in each industry, the extent to which firms in the industry utilize outsourcing, and whether the industries a company has diversified into have common key success factors

question

One of the biggest strategic challenges to competing in the international arena include

answer

whether to offer a mostly standardized product worldwide or whether to customize the company's offerings in each different country market to match the tastes and preferences of local buyers.

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The success of unrelated diversification is dependent upon management's ability to

answer

identify potential new acquisition candidates that are cash cows (as opposed to cash hogs).

question

The difference between a "cash cow" business and a "cash hog" business is that

answer

a cash cow business produces large internal cash flows over and above what is needed to build and maintain the business whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements.

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A "cash hog" type of business

answer

is one that generates cash flows that are too small to fully fund its operations and growth.

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Which one of the following is not one of the elements of crafting corporate strategy for a diversified company?

answer

Choosing the appropriate value chain for each business the company has entered

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When evaluating strategic fit benefits that related diversification can deliver one must keep in consideration a number of factors. Which one is not relevant?

answer

Related diversification is the process of holding the stock of many businesses in a portfolio.

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The two biggest drawbacks or disadvantages of unrelated diversification are

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demanding managerial requirements and limited competitive advantage potential that cross-business strategic fit provides.

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The two biggest drawbacks or disadvantages of unrelated diversification are

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the difficulties of competently managing a set of fundamentally different businesses and having a very limited competitive advantage potential that cross-business strategic fit provides.

question

A comprehensive evaluation of the group of businesses a company has diversified into involves

answer

All of these.

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Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous when

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All of these.

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The strategic options for expansion into foreign markets include

answer

All of these.

question

The advantages of using an export strategy to build a customer base in foreign markets include

answer

minimizing capital requirements and involvement in foreign markets.

question

Economies of scope

answer

are cost reductions that flow from cost-saving strategic fits along the value chains of related businesses in the business lineup of a multibusiness corporation.

question

The ability of a multinational or global competitor to shift production from country to country to take advantage of exchange rate fluctuations, energy costs, wage rates, or changes in tariffs is an example of

answer

cross-border coordination.

question

Which of the following is not an accurate statement as concerns competing in the markets of foreign countries?

answer

A multicountry strategy is generally superior to a global strategy.

question

The three tests for judging whether a particular diversification move can create value for shareholders are

answer

the attractiveness test, the cost-of-entry test, and the better-off test.

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The most important strategy-making guidance that comes from drawing a nine-cell industry attractiveness-competitive strength matrix is

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that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture.

question

Strategic alliances, joint ventures, and cooperative agreements between domestic and foreign firms are a potentially fruitful means for the partners to

answer

All of these.

question

Which of the following is an important appeal of a related diversification strategy?

answer

Offers opportunities to transfer skills, expertise, technical know-how, or other capabilities from one business to another

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Conclusions about what the priorities should be for allocating resources to the various businesses of a diversified company need to be based on such considerations as

answer

All of these.

question

Different businesses are said to be "unrelated" when

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there is an absence of competitively valuable strategic fits between their respective value chains.

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Divestiture can be accomplished by

answer

All of these.

question

A country's business climate is not a function of the political and economic risk factors, such as:

answer

host-government hostility toward allowing foreign businesses market entry, often requiring local produced parts and components to be included in manufacturing, allowing for ease of funds transfers from the host country, and often requiring local ownership.

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Assessments of how a diversified company's subsidiaries compare in competitive strength should be based on such factors as

answer

relative market share, ability to match or beat rivals on key product attributes, brand image and reputation, costs relative to competitors, and ability to benefit from strategic fits with sister businesses.

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Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed, which one of the following is not one of the main strategy options that a company can pursue?

answer

Craft new initiatives to build/enhance the company's reputation

question

Which of the following is not a typical reason for a company to expand into the markets of foreign countries?

answer

To strengthen its capability to employ offensive strategies, especially those that involve preemptive strikes

question

Cross-border coordination contributes to a competitive advantage for a global competitor by

answer

All of these.

question

Two drawbacks of a "think local, act local" multidomestic strategy are

answer

hindering a company's transfer of competencies and resources across country boundaries (since somewhat different competencies and capabilities are likely to be employed in different host countries) and not promoting the building of a single, unified competitive advantage in all country markets where a company competes.

question

What rationales for unrelated diversification are not likely to increase shareholder value?

answer

All of these

question

To use location to build competitive advantage, a company that operates multinationally or globally must

answer

consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

question

Businesses are said to be "related" when

answer

their value chains possess competitively valuable cross-business relationships that present opportunities to transfer skills and capabilities from one business to another, share resources or facilities to reduce costs, share use of a well-known brand name, and/or create mutually useful resource strengths and capabilities.

question

The essential requirement for different businesses to be "related" is that

answer

their value chains possess competitively valuable cross-business fit relationships.

question

With an unrelated diversification strategy, the types of companies that make particularly attractive acquisition targets are

answer

financially distressed companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital.

question

Retrenching to a narrower diversification base

answer

is directed at improving long-term performance by building stronger positions in a smaller number of core businesses.

question

Acquisition of an existing business is an attractive strategy option for entering a promising new industry because it

answer

is an effective way to hurdle entry barriers, is usually quicker than trying to launch a new start-up operation, and allows the acquirer to move directly to the task of building a strong position in the target industry.

question

The market size and market growth rates in the foreign market can be influenced negatively by

answer

population sizes, income levels and cultural influences, the current state of the infrastructure and distribution and retail networks available.

question

The nine-cell industry attractiveness-competitive strength matrix

answer

is useful for helping decide which businesses should have high, average, and low priorities in allocating corporate resources.

question

A company that succeeds in differentiating its product offering from those of its rivals can usually

answer

All of these.

question

Which one of the following is not a good type of rival for an offensive-minded company to target?

answer

Other offensive-minded companies with a sizable war chest of cash and marketable securities.

question

A company's competitive strategy deals with

answer

management's game plan for securing a competitive advantage relative to rivals.

question

Why do mergers and acquisitions sometimes fail to produce anticipated results?

answer

All of these.

question

Which of the following is not an action that a company can take to do a better job than rivals of performing value chain activities more cost-effectively?

answer

Redesigning products to eliminate features that might have market appeal, but excessively increase production costs

question

The advantages of using a franchising strategy to pursue opportunities in foreign markets include

answer

having franchisees bear most of the costs and risks of establishing foreign locations and requiring the franchisor to expend only the resources to recruit, train, and support foreign franchisees.

question

A "think global, act global" approach to strategy making is preferable to a "think local, act local" approach when

answer

country-to-country differences are small enough to be accommodated with the framework of a mostly uniform global strategy.

question

When a company operates in the markets of two or more different countries, its foremost strategic issue is

answer

whether to vary the company's competitive approach to fit specific market conditions and buyer preferences in each host country or whether to employ essentially the same strategy in all countries.

question

The best place to look for cross-business strategic fits is

answer

in R&D and technology activities.

question

The basic purpose of calculating competitive strength scores for each of a diversified company's business units is to

answer

provide a quantitative measure of the overall market strength and competitive standing for each business unit.

question

Which is not one of the four conditions that make an internal start-up strategy appealing?

answer

When adding new production capacity will adversely impact the supply-demand balance in the local market

question

In expanding outside its domestic market, a company can gain competitive advantage by

answer

using location to lower costs or help achieve greater product differentiation and it can use cross-border coordination in ways a domestic-only competitor cannot.

question

In competing in foreign markets, companies find it advantageous to concentrate their activities in a limited number of locations when

answer

All of these.

question

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because

answer

All of these.

question

The task of crafting corporate strategy for a diversified company encompasses

answer

All of these.

question

Corporate restructuring strategies

answer

involve making radical changes in a diversified company's business lineup, divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup.

question

The reasons behind the accelerating pace of globalization include

answer

All of these.

question

Which of the following is not a typical option that companies have to consider to tailor their strategy to fit the circumstances of emerging country markets?

answer

Develop a strategy for the short-term and forget about a long-term strategy because conditions in emerging country markets change so rapidly

question

Which one of the following is not a reasonable option for deploying a diversified company's financial resources?

answer

Concentrating most of a company's financial resources in cash cow businesses and allocating little or no additional resources to cash hog businesses until they show enough strength to generate positive cash flows

question

To use location to build competitive advantage when competing in both domestic and foreign markets, a company must

answer

consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.

question

Which of the following is not one of the strategy options for expanding into markets of foreign countries?

answer

A profit sanctuary strategy

question

Which one of the following is not part of the task of checking a diversified company's business lineup for adequate resource fit?

answer

Determining whether business units offer opportunities to transfer skills or technology or intellectual capital from one business to another

question

The one factor that is not relevant for company managers to worry about when their company has many unrelated firms, especially when they are very diverse is to

answer

pick business-unit heads having requisite combination of managerial skills and know-how to motivate people.

question

The procedure for evaluating the pluses and minuses of a diversified company's strategy includes

answer

All of these.

question

In a diversified company, the competitive advantage potential of cross-business strategic fit is greater when

answer

valuable opportunities exist to transfer skills, technology, or intellectual capital from one business to another, combine the performance of related activities, or share the use of a well-respected brand name across multiple products or service categories.

question

Moves to improve a diversified company's overall performance include

answer

All of these.

question

Which of the following is not one of the suggested appeals of an unrelated diversification strategy?

answer

Superior top management ability to cope with the wide variety of problems encountered in managing a broadly diversified group of businesses.

question

The value of determining the relative competitive strength of each business a company has diversified into is

answer

to have a quantitative basis for rating them from strongest to weakest in contending for market leadership in their respective industries.

question

Dispersing the performance of value chain activities to many different countries rather than concentrating them in a few country locations tends to be advantageous

answer

All of these.

question

Diversifying into a new industry by forming a new internal subsidiary to enter and compete in the target industry is attractive when

answer

there is ample time to launch the new business from the ground up

question

When industry attractiveness ratings are calculated for each of the industries a multi-business company has diversified into, the results help indicate

answer

which industries appear to be the most and least attractiveness from the standpoint of the company's long-term performance.

question

Competing in the markets of foreign countries entails dealing with such factors as

answer

All of these.

question

A "cash cow" type of business

answer

generates positive cash flows over and above its internal requirements, thus providing a corporate parent with cash flows that can be used for financing new acquisitions, investing in cash hog businesses, funding share buyback programs, and/or paying dividends.

question

Establishing a subsidiary in a foreign market to take advantage of all essential value chain activities requires a strategy that

answer

supports direct control over all aspects of operating in a foreign market.

question

Companies racing for global market leadership

answer

generally have to consider establishing competitive positions in the markets of emerging countries.

Strategic Management Chapters 7 ; 8 – Flashcards

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