Question 1

John's surfboard shop has a long-term relationship with two surfboard makers.John is usiog:

Accepted Answer

A)  parallel sourciog.
B)  cross-selliog.
C)  product bundliog.
D)  vertical iotegration.
E)  horizontal iotegration.

Question 2

Credible commitments refer to:

Accepted Answer

A)  believable promises that support the development of a long-term relationship between companies.
B)  the merging of two companies that have an equal market share.
C)  to obtaining of goods, services or works from an external source.
D)  the acquisition of one company by another company. 
E)  the outsourcing of after-sale services to a different company.

Question 3

Horizontal integration in an industry tends to:

Accepted Answer

A)  increase the cost structure.
B)  increase product differentiation.
C)  undermine the company's competitive advantage.
D)  increase rivalry within the industry.
E)  reduce bargaining power over suppliers and buyers.

Question 4

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Accepted Answer

A) True 
 B)False

Question 5

A company pursuing a strategy of vertical integration may expand its operations:

Accepted Answer

A)  backward into an industry that produces inputs for the company's products.
B)  by making specialized investments jointly with its competitor.
C)  laterally into an industry that competes with the company's products.
D)  by merging with industry competitors.
E)  by using its capital resources to purchase another company within the industry.

Question 6

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Accepted Answer

A) True 
 B)False

Question 7

The price that one division of a company charges another division for its products, which are the inputs the other division requires to manufacture its own products is known as:

Accepted Answer

A)  vertical disintegration.
B)  related pricing.
C)  transfer pricing.
D)  related diversification.
E)  tapered pricing.

Question 8

Vertical disintegration is said to occur when:

Accepted Answer

A)  a company decides to exit industries either forward or backward in the industry value chain to its core industry.
B)  a company takes advantage of another company it does business with after the other company has made an substantial investment in assets to meet the needs of the company.
C)  a company decides to acquire its suppliers and distributors.
D)  a company uses its capital resources to purchase its competitor.
E)  a company decides to sell its business model to another company.

Question 9

In which of the following is a firm most likely to lose direct control over value creation activities?

Accepted Answer

A)  Merger
B)  Acquisition
C)  Vertical integration
D)  Strategic alliance
E)  Outsourcing

Question 10

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may fmd itself:

Accepted Answer

A)  locked into an old, inefficient technology.
B)  able to sell its products at continually lower prices.
C)  increasing returns on its assets.
D)  establishing a monopoly in the industry.
E)  lowering its cost structure.

Question 11

When a company decides to expand into new industries, it must:

Accepted Answer

A)  develop "multibusiness model" that justifies its entry into different businesses.
B)  halt marketing activities in the current industry to avoid being associated with one specific industry.
C)  select a new CEO and reappoint the board of directors.
D)  create one common business model for all the industries rather than each business unit. 
E)  avoid talking about ways of increasing profitability in the business model.

Question 12

Horizontal integration may be thought of as:

Accepted Answer

A)  moving into a new unrelated industry.
B)  giving control to suppliers.
C)  gaining control of distributors.
D)  staying inside the industry in which the company currently operates.
E)  combining functional units within the company.

Question 13

GM typically solicits bids from global suppliers to produce a particular component and awards a !-year contract to the supplier that submits the lowest bid.At the end of the year, a contract is once again put out for bid, and once again the lowest cost supplier is most likely to win the bid.Which of the following is GM using?

Accepted Answer

A)  Strategic outsourcing
B)  Competitive bidding
C)  Strategic bidding
D)  Long-term alliance
E)  Hostage taking

Question 14

Vertical integration is undertaken to support the competitive position of a company's core business.

Accepted Answer

A) True 
 B)False

Question 15

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Accepted Answer

A) True 
 B)False

Question 16

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Accepted Answer

A) True 
 B)False

Question 17

Outsourcing occurs when a firm:

Accepted Answer

A)  buys one of its rivals.
B)  merges with one of its suppliers.
C)  enters into a joint venture with a rival.
D)  hires another firm to perform value creation activities.
E)  enters into contracts with two suppliers simultaneously.

Question 18

Which of the following problems is associated with the strategy of vertical integration?

Accepted Answer

A)  Decrease in cost structure
B)  Increase in industry competition
C)  Vulnerability to unpredictable demand
D)  Assured conflict with the antitrust authorities
E)  Lack of bureaucratic costs

Question 19

All of the following are benefits of horizontal integration except:

Accepted Answer

A)  Reduced risk of corning into conflict with the FTC
B)  Increased product differentiation
C)  Reduced industry rivalry
D)  Increased bargaining power over suppliers
E)  Reduced cost structure

Question 20

Outsourcing:

Accepted Answer

A)  eliminates the need for a value chain.
B)  reduces the firm's dependence on its value chain.
C)  reorders the steps in a firm's value chain.
D)  moves some value chain activities outside the firm. 
E)  strengthens the firm's capabilities in each value chain function.

Exam 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

John's surfboard shop has a long-term relationship with two surfboard makers.John is usiog:

Correct Answer
verified

Horizontal integration in an industry tends to:

Correct Answer
verified

Outsourcing occurs when a firm:

Correct Answer
verified

Correct Answer
verified

Vertical integration is undertaken to support the competitive position of a company's core business.

Correct Answer
verified

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may fmd itself:

Correct Answer
verified

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Correct Answer
verified

The price that one division of a company charges another division for its products, which are the inputs the other division requires to manufacture its own products is known as:

Correct Answer
verified

Vertical disintegration is said to occur when:

Correct Answer
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When a company decides to expand into new industries, it must:

Correct Answer
verified

A company pursuing a strategy of vertical integration may expand its operations:

Correct Answer
verified

All of the following are benefits of horizontal integration except:

Correct Answer
verified

Outsourcing:

Correct Answer
verified

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Correct Answer
verified

Horizontal integration may be thought of as:

Correct Answer
verified

Credible commitments refer to:

Correct Answer
verified

In which of the following is a firm most likely to lose direct control over value creation activities?

Correct Answer
verified

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Correct Answer
verified

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Correct Answer
verified

Which of the following problems is associated with the strategy of vertical integration?

Correct Answer
verified

Exam 9: Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

John's surfboard shop has a long-term relationship with two surfboard makers.John is usiog:

Correct AnswerverifiedShow Answer

Horizontal integration in an industry tends to:

Correct AnswerverifiedShow Answer

Outsourcing occurs when a firm:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Vertical integration is undertaken to support the competitive position of a company's core business.

Correct AnswerverifiedShow Answer

When technology in an industry is changing rapidly, a company pursuing a strategy of vertical integration may fmd itself:

Correct AnswerverifiedShow Answer

The term bureaucratic costs refers to costs associated with the creation and maintenance of the administrative function in a company.

Correct AnswerverifiedShow Answer

The price that one division of a company charges another division for its products, which are the inputs the other division requires to manufacture its own products is known as:

Correct AnswerverifiedShow Answer

Vertical disintegration is said to occur when:

Correct AnswerverifiedShow Answer

When a company decides to expand into new industries, it must:

Correct AnswerverifiedShow Answer

A company pursuing a strategy of vertical integration may expand its operations:

Correct AnswerverifiedShow Answer

All of the following are benefits of horizontal integration except:

Correct AnswerverifiedShow Answer

Outsourcing:

Correct AnswerverifiedShow Answer

A company should first choose a corporate-level strategy and then look at how changes will affect a company's current business model and strategies.

Correct AnswerverifiedShow Answer

Horizontal integration may be thought of as:

Correct AnswerverifiedShow Answer

Credible commitments refer to:

Correct AnswerverifiedShow Answer

In which of the following is a firm most likely to lose direct control over value creation activities?

Correct AnswerverifiedShow Answer

Horizontal integration allows companies to obtain bargaining power over suppliers or buyers and increase their profitability at the expense of suppliers or buyers.

Correct AnswerverifiedShow Answer

Competitive bidding makes suppliers reluctant to make investments that tie them closely to their trading partners.

Correct AnswerverifiedShow Answer

Which of the following problems is associated with the strategy of vertical integration?

Correct AnswerverifiedShow Answer

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