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Exam 8: Corporate Strategy: Vertical Integration and Diversification

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Question 41

Multiple Choice

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Today,many companies use PeopleSoft and EDS to avoid maintaining a human resource management system.By doing this,these firms are

A) engaging in strategic outsourcing.
B) increasing their level of vertical integration.
C) offshoring their core activities.
D) engaging in unrelated diversification.

E) B) and C)
F) None of the above

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Question 42

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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

A) question marks.
B) stars.
C) cash cows.
D) dogs.

E) None of the above
F) A) and B)

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Question 43

Multiple Choice

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The most efficient way to overcome the principal-agent problem in a firm is to

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

A firm follows a(n) _____ when less than 70 percent of its revenues come from a single business and there are few,if any,linkages among its businesses.

Which of the following would hinder firm performance?

Which of the following is an example of an external transaction cost?

BM Goods Inc.is a large conglomerate that operates only in its home country.The company competes in industries like the consumer electronics,health care,hotel,airlines,education,and steel industries.Which of the following diversification strategies does this best illustrate?

Which quadrant in the core competence-market matrix is the hardest to pursue?

In the market for used cars,which of the following is a reason behind the crowding out of desirable cars by lemons or inferior ones?

Coca-Cola was primarily known for its core competencies in marketing,bottling,and distributing aerated drinks.However,with the success of Gatorade,Coca-Cola developed competencies in the development and marketing of its own sports drink,Powerade.Which of the following is true of Coca-Cola?

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

About 20 years ago,Sturdy Light,Inc.,produced a sturdy,lightweight backpack in a market that was rapidly growing.Sturdy Light became a leader in this market.Eventually,the backpack market reached the maturity stage and slowed down.However,by this time,Sturdy Light had developed a strong brand name and continued to steadily lead the market.Which of the following describes this scenario?

Apple and Nike have their own retail outlets and also use other independent retailers,both the brick-and-mortar type and online,to sell their products.This is an example of

Diversification premium is a situation in which

TimeEnough Inc.entered the low-priced digital watch market several years ago.This firm's earnings have been unsteady,but might be growing.According to the BCG growth matrix,TimeEnough is a

In the Boston Consulting Group (BCG) growth-share matrix,strategic business units categorized under dogs

When Toyota wanted to secure a long-term supply of lithium,it had to create a bond of trust with an Australian company,Orocobre Ltd.Orocobre wanted to establish the bond of trust before making huge investments in specialized equipment required to extract the high-quality lithium.What did Toyota do to instill this trust?

Which of the following firms is most prone to experiencing a diversification discount?

Managers in a firm hired to improve the firm's profitability and ultimately the shareholders' value will add to the overall costs if they pursue their own self-interests.What does this best illustrate?