Chapter 07
Long-Term Objectives and Strategies
  
Multiple Choice Questions 
1. (p. 179) Objectives should be suited to the broad aims of the organization which are expressed in the statement of the company: A. ProfileB. MissionC. PhilosophyD. Goals
 
Difficulty: MediumLearning Objective: 1 
2. (p. 179) The function of objectives is: A. To provide a specific statement of the desires of the firmB. To deal with profitability, growth and survival without specific targets or time framesC. To provide specific benchmarks for evaluating the company’s progress in achieving its aimsD. To enhance stock market optimism
 
Difficulty: EasyLearning Objective: 1 
3. (p. 179) Which of the following are intended to provide benchmarks for the evaluation of the company’s progress in achieving its aim? A. MissionB. Long-term objectivesC. Grand strategiesD. Business policies
 
Difficulty: EasyLearning Objective: 1 
 
4. (p. 179) Grand strategies provide a comprehensive general approach to guide the organization’s: A. Major actions designed to accomplish long-term objectivesB. Major actions designed to accomplish short-term objectivesC. Operational actions designed to accomplish short-term objectivesD. Operational actions designed to accomplish intermediate term objectives
 
Difficulty: EasyLearning Objective: 1 
5. (p. 179-180) Which of the following is NOT a commonly pursued long-term objective as described in the text? A. ProfitabilityB. Public responsibilityC. EfficiencyD. Productivity
 
Difficulty: EasyLearning Objective: 1 
6. (p. 179-180) To achieve long-term prosperity, strategic planners commonly establish objectives in which of the following? A. Profitability, employee relations and public responsibilityB. AcceptabilityC. FlexibilityD. Joint ventures only
 
Difficulty: MediumLearning Objective: 1 
 
7. (p. 180) To achieve long-term prosperity, strategic managers commonly establish long-term objectives in seven areas. Which of the following describes one of these areas? A. Technological leadershipB. Technological innovationC. Social changeD. Marketing
 
Difficulty: MediumLearning Objective: 1 
8. (p. 180) Competitive position as a measure of corporate success is typically measured as: A. The input-output relationship of the companyB. The earnings per share of the companyC. The company’s relative dominance in the marketplaceD. The firm’s stock value
 
Difficulty: MediumLearning Objective: 1 
9. (p. 180) Larger firms often establish an objective by which to gauge their comparative ability for growth and profitability. This is often stated in terms of: A. Competitive product lineB. Competitive positionC. Product innovationD. Competitive edge
 
Difficulty: MediumLearning Objective: 1 
 
10. (p. 180) Establishing objectives for minority training is an example of which type of long-term objective? A. Competitive positionB. Employee developmentC. Public responsibilityD. Productivity
 
Difficulty: HardLearning Objective: 1 
11. (p. 180) Safety programs, employee stock option plans and worker representation on management committees are all commonly directed toward achieving which type of long-term objectives? A. Employee relationsB. Public responsibilityC. Employee developmentD. Competitive position
 
Difficulty: MediumLearning Objective: 1 
12. (p. 181) Which of the following does NOT describe a good objective? A. FlexibleB. AcceptableC. MarketableD. Achievable
 
Difficulty: EasyLearning Objective: 2 
 
13. (p. 181) Flexibility is usually increased at the expense of: A. ReliabilityB. TimelinessC. SpecificityD. Mobility
 
Difficulty: MediumLearning Objective: 2 
14. (p. 181) Which of the following is NOT a fundamental criterion for a long-term objective? A. AcceptableB. SustainableC. MeasurableD. Suitable
 
Difficulty: EasyLearning Objective: 2 
15. (p. 181) Which of the following qualities of an objective improves its chances of being attained? A. TimelinessB. FlexibilityC. Cost efficiencyD. Ground breaking
 
Difficulty: HardLearning Objective: 2 
16. (p. 182) “To achieve our vision, how will we sustain our ability to change and improve?” is part of which perspective in the Balanced Scorecard? A. FinancialB. CustomerC. Learning and growthD. Internal business process
 
Difficulty: HardLearning Objective: 2 
 
17. (p. 182) Which one of the following is NOT a perspective found in the Balanced Scorecard? A. Stakeholder performanceB. Financial performanceC. Customer knowledgeD. Learning and growth
 
Difficulty: EasyLearning Objective: 2 
18. (p. 183) Which of the following is a generic strategy developed by Michael Porter? A. Market developmentB. DifferentiationC. LiquidationD. Innovation
 
Difficulty: MediumLearning Objective: 3 
19. (p. 183) A properly constructed Balanced Scorecard is balanced between: A. Short and long-term measuresB. Stakeholder financial measuresC. Organizational and stakeholder performance perspectivesD. Pricing and packaging of the firm’s products
 
Difficulty: MediumLearning Objective: 2 
20. (p. 183) Striving to create and market unique products for varied customer groups is called: A. Cost leadershipB. DifferentiationC. FocusD. Concentrated growth
 
Difficulty: MediumLearning Objective: 3 
 
21. (p. 184) Intense supervision of labor is a commonly required skill for which one of Michael Porter generic strategies? A. DifferentiationB. Market developmentC. Product developmentD. Overall cost leadership
 
Difficulty: HardLearning Objective: 3 
22. (p. 185) Which of the following is NOT a value discipline? A. Operational excellenceB. Cost leadershipC. Customer intimacyD. Product leadership
 
Difficulty: MediumLearning Objective: 4 
23. (p. 188) Which of the grand strategies is typically lowest in risk? A. Horizontal integrationB. Concentrated growthC. Market developmentD. Divestiture
 
Difficulty: EasyLearning Objective: 5 
24. (p. 188) Firms that focus on a specific product and market combination are utilizing a _______ strategy. A. Concentrated growthB. TurnaroundC. InnovationD. Product development
 
Difficulty: EasyLearning Objective: 5 
 
25. (p. 187) Grand strategies are designed to accomplish which of the following? A. Short-term objectivesB. Long-term goalsC. Short-term goalsD. Long-term objectives
 
Difficulty: EasyLearning Objective: 5 
26. (p. 187) Grand strategies are often called: A. Corporate strategiesB. Coordinate strategiesC. Master strategiesD. Directed action
 
Difficulty: MediumLearning Objective: 5 
27. (p. 188) The grand strategy in which the firm directs its resources to the profitable growth of a single product, in a single market and with a single technology is termed: A. Product developmentB. Market developmentC. Concentrated growthD. Vertical integration
 
Difficulty: EasyLearning Objective: 5 
28. (p. 190) Under stable conditions, concentrated growth is characterized as: A. Higher riskB. Lower riskC. Increasing resource needsD. Increasing costs
 
Difficulty: MediumLearning Objective: 5 
 
29. (p. 190) Under changing conditions, concentrated growth is characterized as: A. Higher riskB. Lower riskC. Decreasing resource needsD. Lowering revenues
 
Difficulty: MediumLearning Objective: 5 
30. (p. 190) Typical risks facing the firm that follow a concentrated growth strategy include: A. Riskier in stable conditionsB. Extra funds requiredC. Faltering marketsD. Defining a broad market correctly
 
Difficulty: MediumLearning Objective: 5 
31. (p. 191) Marketing present products, often with only cosmetic modification, to customers in related market areas describes: A. DiversificationB. Concentrated growthC. Product developmentD. Market development
 
Difficulty: EasyLearning Objective: 5 
32. (p. 192) Concentration encompasses increasing present customer rate of usage. This includes: A. Increasing size of purchaseB. Pricing up or downC. Developing quality variationsD. Marketing in new channels
 
Difficulty: HardLearning Objective: 5 
 
33. (p. 192) Specific options under the concentration grand strategy include which of the following? A. Opening additional geographic marketsB. Increasing present customer’s rate of usageC. Developing new productsD. Selling to a differentiated customer
 
Difficulty: MediumLearning Objective: 5 
34. (p. 191) The grand strategy commonly ranked second in low risk and cost is: A. Market developmentB. Vertical integrationC. Joint ventureD. Concentrated growth
 
Difficulty: MediumLearning Objective: 5 
35. (p. 192) Market development encompasses attracting other market segments. This includes: A. Increasing promotional effortB. Including trial useC. Advertising in other mediaD. Opening more branches in the same city
 
Difficulty: MediumLearning Objective: 5 
36. (p. 192) Specific approaches to the grand strategy of market development include which of the following? A. Entering additional channels of distributionB. Attracting competitors’ customersC. Reducing pricesD. Attracting current non-users
 
Difficulty: MediumLearning Objective: 5 
 
37. (p. 192) Attracting competitors’ customers encompasses: A. Decreasing promotional effortsB. Establishing sharper brand similaritiesC. Initiating price cutsD. Increasing purchase size
 
Difficulty: MediumLearning Objective: 5 
38. (p. 192) Methods to develop new product features include: A. InverseB. ModifyC. ReviewD. Retreat
 
Difficulty: MediumLearning Objective: 5 
39. (p. 192) _______ strategy allows firms to leverage some of their traditional strengths by identifying new uses of existing products and by finding new demographic or psycho graphic markets. A. InnovationB. Product developmentC. Market developmentD. Horizontal integration
 
Difficulty: MediumLearning Objective: 5 
40. (p. 193) A “new and improved” product describes: A. DiversificationB. Concentrated growthC. Product developmentD. Market development
 
Difficulty: MediumLearning Objective: 5 
 
41. (p. 193) Improving the way a detergent smells is an example of: A. Market expansionB. Product developmentC. Product innovationD. Product extinction
 
Difficulty: MediumLearning Objective: 5 
42. (p. 194) Creating a new-product life cycle is the underlying philosophy of a grand strategy of: A. Product developmentB. InnovationC. Horizontal integrationD. Market development
 
Difficulty: MediumLearning Objective: 5 
43. (p. 194) Few innovative ideas prove to be profitable because of: A. Low development costsB. Low pre-marketing costsC. High research costsD. High post-marketing costs
 
Difficulty: MediumLearning Objective: 5 
44. (p. 195) The acquisition of one or more businesses operating at the same stage of the production-marketing chain is an example of: A. Market developmentB. Product developmentC. InnovationD. Horizontal integration
 
Difficulty: EasyLearning Objective: 5 
 
45. (p.195) When the long-term strategy of a firm is based on growth through the acquisition of one or more similar businesses operating at the same stage of the production-marketing chain, this is called: A. Vertical integrationB. ConglomerationC. Horizontal integrationD. Liquidation
 
Difficulty: EasyLearning Objective: 5 
46. (p. 197) If a textile producer acquires a shirt manufacturer, this is called: A. Vertical horizontal integrationB. Backward horizontal integrationC. Backward vertical integrationD. Forward vertical integration
 
Difficulty: MediumLearning Objective: 5 
47. (p. 195) If Cola Creations acquires Seltzer Spirit Co., this merger would describe what type of strategy? A. Joint ventureB. Horizontal integrationC. Vertical integrationD. Divestiture
 
Difficulty: MediumLearning Objective: 5 
 
48. (p. 195) The grand strategy that provides access to new markets for a company while at the same time eliminating competitors is termed: A. Concentric diversificationB. Horizontal integrationC. Vertical integrationD. Conglomerate diversification
 
Difficulty: EasyLearning Objective: 5 
49. (p. 197) If a shirt manufacturer acquires a textile manufacturer, this strategy is called: A. Backward vertical integrationB. DiversificationC. Joint ventureD. Horizontal integration
 
Difficulty: MediumLearning Objective: 5 
50. (p. 198) Motivations of acquiring firms include: A. Decreased stock priceB. Increased market shareC. Different debt/equity ratioD. Decreased P/E ratio
 
Difficulty: HardLearning Objective: 5 
51. (p.197) The grand strategy involving the acquisition of businesses that serve as a customer for the firm’s outputs, such as warehouses for finished products is called: A. Backward concentric diversificationB. Pooled horizontal integrationC. Forward vertical integrationD. Sequential horizontal integration
 
Difficulty: EasyLearning Objective: 5 
 
52. (p. 197) The grand strategy involving the acquisition of businesses that supply the firm with inputs such as raw materials is termed: A. Forward concentric diversificationB. Sequential horizontal integrationC. Backward vertical integrationD. Retrenchment
 
Difficulty: EasyLearning Objective: 5 
53. (p. 197) If a donut corporation acquires a flour company, this strategy would be called: A. Vertical integrationB. DiversificationC. ConglomerationD. Joint venture
 
Difficulty: MediumLearning Objective: 5 
54. (p. 197) If a shirt manufacturer acquired a chain of men’s clothing outlets, this would be an example of: A. Forward integrationB. Backward integrationC. Horizontal integrationD. Conglomerate diversification
 
Difficulty: MediumLearning Objective: 5 
 
55. (p. 198) When the principal or sole consideration of the acquiring firm is the profit pattern of the venture, the grand strategy is usually one of: A. InnovationB. Horizontal integrationC. Concentric diversificationD. Conglomerate diversification
 
Difficulty: EasyLearning Objective: 5 
56. (p. 198) Conglomerate diversification is concerned primarily with: A. Stock appreciationB. Product developmentC. Market synergyD. Financial returns
 
Difficulty: MediumLearning Objective: 5 
57. (p. 198) If a firm plans to acquire a business because it represents the most promising investment opportunity available, the grand strategy is: A. Conglomerate diversificationB. Joint ventureC. Concentric diversificationD. Liquidation
 
Difficulty: MediumLearning Objective: 5 
 
58. (p. 198) When diversification involves additions of a business related to the firm in terms of technology, markets or products, it involves: A. Concentrated growthB. Horizontal integrationC. Concentric diversificationD. Vertical diversification
 
Difficulty: MediumLearning Objective: 5 
59. (p. 198) With this type of grand strategy, the new businesses selected possess a high degree of compatibility with the current business: A. Conglomerate diversificationB. Concentric diversificationC. Joint ventureD. Divestiture
 
Difficulty: MediumLearning Objective: 5 
60. (p. 199) A spin-off usually indicates: A. IntegrationB. DiversificationC. Joint ventureD. Retrenchment
 
Difficulty: HardLearning Objective: 5 
61. (p. 199) The motivations of acquiring firms using diversification strategy include: A. Steadying the growth rate of the firmB. Decreasing productivityC. Increasing stock value of the firmD. Gaining shareholders
 
Difficulty: MediumLearning Objective: 5 
 
62. (p. 199) Concentric diversification may be undertaken as a grand strategy because the acquiring firm wishes to: A. Acquire an investment opportunityB. Sell off unneeded assets quicklyC. Balance or fill out its product lineD. Trim its product line
 
Difficulty: MediumLearning Objective: 5 
63. (p. 200) According to researchers, the grand strategies of retrenchment/turnaround are most often accomplished in extreme circumstances through which of the following? A. Cost reductionsB. Asset reductionsC. Changes in top managementD. Diversification
 
Difficulty: MediumLearning Objective: 5 
64. (p. 199) The type of strategy typically accomplished either by cost reduction and/or asset reduction is known as: A. Market developmentB. InnovationC. LiquidationD. Turnaround
 
Difficulty: EasyLearning Objective: 5 
 
65. (p. 199) Retrenchment is typically accomplished through: A. Asset reductionB. Profit reductionC. Cost reductionD. Revenue enhancement
 
Difficulty: MediumLearning Objective: 5 
66. (p. 203) When the grand strategy is liquidation, the business is: A. Typically sold in partsB. Sold as a going concernC. Sold for “good will” valueD. Leased with the option to repurchase
 
Difficulty: MediumLearning Objective: 5 
67. (p. 201) The grand strategy that involves the sale of a business or major business component is called: A. DivestitureB. IntegrationC. DiversificationD. Liquidation
 
Difficulty: EasyLearning Objective: 5 
68. (p. 203) If a business is sold for its tangible asset value, the strategy is one of: A. DivestitureB. ConglomerationC. LiquidationD. Diversification
 
Difficulty: EasyLearning Objective: 5 
 
69. (p. 201) The second phase of the turnaround process is called: A. Recovery responseB. TurnaroundC. RetrenchmentD. Divestiture
 
Difficulty: MediumLearning Objective: 5 
70. (p. 203) As a long-term strategy, this minimizes the loss to all stockholders of the firm: A. Concentrated growthB. DivestitureC. TurnaroundD. Liquidation
 
Difficulty: HardLearning Objective: 5 
71. (p. 204) When a firm attempts to persuade its creditors to temporarily freeze their claims while it undertakes to reorganize and rebuild its operations more profitably, this form of bankruptcy is called: A. Reorganization bankruptcyB. Liquidation bankruptcyC. Partial bankruptcyD. Organizational bankruptcy
 
Difficulty: MediumLearning Objective: 5 
72. (p. 203) Which is considered the least attractive grand strategy? A. Joint ventureB. LiquidationC. Concentrated growthD. Divestiture
 
Difficulty: EasyLearning Objective: 5 
 
73. (p. 203) When a firm agrees to a complete distribution of its assets to creditors, most of whom will receive a small fraction of the amount that they are owed, this form of bankruptcy is called a: A. Reorganization bankruptcyB. Liquidation bankruptcyC. Partial bankruptcyD. Organizational bankruptcy
 
Difficulty: MediumLearning Objective: 5 
74. (p. 204) Which of the following types of bankruptcies provides the firm with a conditional second chance? A. Liquidation bankruptcyB. Total bankruptcyC. Organizational bankruptcyD. Reorganization bankruptcy
 
Difficulty: MediumLearning Objective: 5 
75. (p. 203) More than 75 percent of financially desperate firms file for a: A. Reorganization bankruptcyB. Partial bankruptcyC. Liquidation bankruptcyD. Chapter 12 bankruptcy
 
Difficulty: MediumLearning Objective: 5 
 
76. (p. 204) Chapter 11 of the Bankruptcy Code deals with: A. ReorganizationB. LiquidationC. A second chanceD. A conditional second chance
 
Difficulty: MediumLearning Objective: 5 
77. (p. 204) Which kind of bankruptcy provides time and protection to the debtor firm? A. Chapter 5 bankruptcyB. Chapter 7 bankruptcyC. Chapter 11 bankruptcyD. Chapter 12 bankruptcy
 
Difficulty: MediumLearning Objective: 5 
78. (p. 206) When companies lack a necessary component for success in a particular environment, they may participate in types of joint ventures which include: A. LeasingB. Strategic allianceC. Joint ownershipD. Divestiture
 
Difficulty: EasyLearning Objective: 5 
 
79. (p. 206) Occasionally, two or more capable companies lack a necessary component for success in a particular competitive environment. The optimal strategy in such a case would be: A. Concentric integrationB. DiversificationC. Conglomerate diversificationD. Joint venture
 
Difficulty: MediumLearning Objective: 5 
80. (p. 208) _______ is partnerships that exist for a defined period during which partners contribute their skills and expertise to a cooperative project. A. Licensing agreementsB. Franchising agreementsC. Export agreementsD. Strategic alliances
 
Difficulty: MediumLearning Objective: 5 
81. (p. 208) Strategic alliances are distinguished from joint ventures because: A. Joint ventures do not work in global situationsB. Joint ventures are synonymous with licensing agreementsC. Alliances never transfer property rights from U.S. licensors to foreign licensees for strategic allianceD. There are no equity positions taken in strategic alliances
 
Difficulty: MediumLearning Objective: 5 
 
82. (p. 208) Consortia are: A. Licensing agreements that exchange equity positionsB. Joint venturesC. Decreasing costs but not risksD. Large interlocking relationships between businesses of an industry
 
Difficulty: EasyLearning Objective: 5 
83. (p. 209) Strategic choice decision making leads to the selection of long-term objectives and grand strategies. This process is: A. SequentialB. RandomC. SimultaneousD. Closed
 
Difficulty: MediumLearning Objective: 6 
84. (p. 208) A chaebol: A. Is like a keiretsu except financed through government banking groupsB. Is run by the ownersC. Is financed through stock or bond sourcesD. Is found in Viet Nam
 
Difficulty: EasyLearning Objective: 5 
85. (p. 209) A Japanese keiretsu: A. Involves no more than 10 firmsB. Is joined around a trading company or bankC. Does not minimize risks of competitionD. Is a licensing agreement
 
Difficulty: EasyLearning Objective: 5 
 

 

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