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Exam 8: Corporate Strategy: Vertical Integration and Diversification

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Question 41

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Which of the following stakeholders of a company would most likely be responsible for formulating a corporate strategy?

A) the first-line employees
B) the creditors
C) the chief executive officer
D) the middle manager

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Question 42

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Why is following an unrelated diversification strategy especially advantageous in an emerging economy?

A) It allows the conglomerate to overcome institutional weaknesses in emerging economies.
B) It allows the conglomerate to form a monopoly in emerging economies.
C) It allows the conglomerate to use well-defined legal systems in emerging economies.
D) It allows the conglomerate to take advantage of strong capital markets in emerging economies.

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Question 43

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While KFC focuses on international markets, its competitor, Chick-fil-A, focuses on the domestic U.S. market. What is the reason behind this strategic difference?

Fortress International, a large conglomerate, procures a few component parts from external suppliers and also manufactures some of the key raw materials in its own subsidiaries. Aside from this, the company does not solely depend on outside distributors to reach its customers. In fact, it has its own retail stores to distribute its products. In this scenario, which of the following alternatives to vertical integration is Fortress International applying?

Firms are more capable than markets at coordinating highly complex tasks, while markets are more capable of providing high-powered incentives for entrepreneurship.

How does a conglomerate benefit from following an unrelated diversification strategy?

With reference to the Strategy Highlight 8.2, the Tata Group's corporate strategy is attempting to

The smartphone division of the large consumer electronics company, True Electra Inc., has a significant market share in the fast-growing cell phone market. If the company invests further into this division, it will be able to reap increased cash flows. In the Boston Consulting Group (BCG) growth-share matrix, the smartphone division of True Electra will be categorized under

PepsiCo operates in many countries and sells a wide variety of aerated drinks, other beverages, different types of chips, and Quaker Oats goods to achieve continuous growth. From this data, we can conclude that PepsiCo has been involved in

Bulldog Holdings is a U.S.-based consumer electronics company. It owns smaller firms in Japan and Taiwan where most of its cell phone technology is developed and manufactured before being released worldwide. Which of the following alternatives to integration does this best illustrate?

What is a conglomerate? How does it benefit from a diversification strategy?

The Boston Consulting Group (BCG) growth-share matrix locates a firm's individual strategic business units (SBUs) in which two dimensions?

True Tomato Inc. makes organic ketchup. To promote its products, this firm decided to make bottles in the shape of tomatoes. To accomplish this, True Tomato worked with its bottle manufacture to create a set of unique molds for its bottles. Which of the following specialized assets does this example demonstrate?

Nina is in an interview for a sales job that requires no experience. She is trying to portray herself as a highly enthusiastic, energetic person with high-level communication and interpersonal skills. The interviewer is convinced that Nina should be hired as a salesperson in the company. However, in her resume, Nina had not mentioned her previous work experience as she was fired from that job because of her frequent absenteeism. Which of the following does this scenario best illustrate?

Briefly discuss the application of the Boston Consulting Group (BCG) growth-share matrix.

The managers at Camphor Plastics decided that their firm needed to diversify because of overall falling sales and lower performance in one sector. How does diversifying compensate for the lackluster performance in this sector?

Firms that use taper integration also use ________ when they rely on outside-market firms for some of their supplies.

ElectraSync Inc., a large consumer electronics company, has divided each product in its portfolio into a separate strategic business unit (SBU) . The desktop SBU has been experiencing drastic decline in its cash flow, and its market share has also reduced to an insignificant 10 percent. This has been attributed to the low growth in the desktop market after the arrival of tablet computers and laptops. In the context of the Boston Consulting Group (BCG) growth-share matrix, the desktop SBU will be categorized under

What options do managers have to formulate corporate strategy once they have a clear understanding of their firm's core competencies?

The internal and external costs associated with an economic exchange are known as interaction costs.