Strategy Exam 2

67 Questions

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Strategy Exam 2

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Questions and Answers
  • 1. 
    A model of innovation that starts with discoveries in basic science and engineering and develops them into new products and services.
    • A. 

      Monopoly-push

    • B. 

      Technology-push

    • C. 

      Market-pull

    • D. 

      Demand-pull

  • 2. 
    Innovation, according to Hamel, involves more than just commercializing new technologies; it also consists of developing and applying new
    • A. 

      R&D strategies

    • B. 

      Business models

    • C. 

      Marketing plans

    • D. 

      Quality plans

  • 3. 
    Initiatives in precision agriculture
    • A. 

      Solely had been made by Monsanto

    • B. 

      Solely had been made by DuPont

    • C. 

      Had been made by both companies

    • D. 

      Had been made by neither company despite rising farmer demand for this type of innovation

  • 4. 
    Vertical integration may be defined as
    • A. 

      Collecting discrete businesses in the same category in the same company based on the theory that they can bring more value to shareholders than if these businesses operated separately

    • B. 

      Combining marketing and sales in the same company.

    • C. 

      Bringing into one company different stages in the supply chain such as production and distribution) that are normally operated by separate companies

    • D. 

      Combining dominant and related businesses in the same company

  • 5. 
    Though sales of sugar sweetened soft drinks were going down in the U.S., sales of artificially sweetened sodas
    • A. 

      Also were falling

    • B. 

      Were rising rapidly

    • C. 

      Were stable

    • D. 

      Were showing small increases

  • 6. 
    Corporate strategy is the domain of which business issue?
    • A. 

      Deciding in which types of business to compete

    • B. 

      Deciding what functional tactics to use in marketing

    • C. 

      Understanding internal opportunities and external strengths

    • D. 

      Benchmarking in order to meet general industry standards

  • 7. 
    All of the following were motivations for the many acquisitions Medtronic has made, except
    • A. 

      Mitigating R&D risk

    • B. 

      Gaining access to new products and technologies

    • C. 

      Strengthening existing businesses and expanding to new platforms

    • D. 

      Substantially lowering its costs

  • 8. 
    What is the main reason that so many firms stick to incremental innovation?
    • A. 

      Radical innovation failure is greater than incremental innovation failure (the blockbuster problem)

    • B. 

      Wall Street analysts prefer the boldness of incremental change

    • C. 

      Incremental change convinces boards and shareholders that top management teams are not in the least risk averse

    • D. 

      The payoffs of incremental change are much higher, though the risks may be greater

  • 9. 
    DuPont’s journey to sustainability
    • A. 

      Was motivated by a major loss in revenue when it was not able to market CFC substitutes

    • B. 

      Was motivated by raising profits from eliminating waste and raising revenues from new products

    • C. 

      Was motivated by a low public rankings in green ratings

    • D. 

      Was motivated by high margins in its chemical businesses which allowed it to branch out in new areas

  • 10. 
    This former chemical company _______is most focused on seeds and crop protection, this one_____  is second in its focus in this area, while this one_____ is the least focused in this area.
    • A. 

      Dow…DuPont…Monsanto

    • B. 

      Monsanto…Dow…DuPont

    • C. 

      DuPont….Monsanto….Dow

    • D. 

      Monsanto…DuPont…Dow

  • 11. 
    Investors
    • A. 

      Were indifferent to Coke’s and Pepsi’s efforts to conserve global water resources

    • B. 

      Cared about water usage because shortages might raise prices and hurt the soft drink companies’ bottom line

    • C. 

      Criticized Coke and Pepsi for what they considered greenwashing when these companies insistently publicized their efforts to conserve water

    • D. 

      Asked Coke and Pepsi not try to calculate their overall water footprint and to cutback in their water saving goals

  • 12. 
    As shown by the Monsanto and DuPont case, which statement below is the most true about the path that strategic innovation typically takes
    • A. 

      It mainly means churning out a rapid and regular flow of new products that rely on a firm’s current internal capabilities.

    • B. 

      It mainly is related to a firm’s investment in R&D and patenting to protect its intellectual property from encroachment by major competitors.

    • C. 

      It relies more heavily on a firm’s evaluation of its current internal strengths and weaknesses than on its assessment of the external opportunities and threats it is likely to confront in the future.

    • D. 

      It often depends on a sequence of well-choreographed corporate strategy, business strategy, and global strategy moves; indeed, the more well-sequenced these moves are the more likely the firm is to succeed in reorienting its strategy.

  • 13. 
    The climate change commitments of
    • A. 

      Walmart are based on quantifiable goals

    • B. 

      Whole Foods are based on quantifiable goals

    • C. 

      Whole Foods have lead it not to be interested in issues of animal rights and protection

    • D. 

      Walmart have led to major, substantive changes in the practices of Asian contractors and subcontractors

  • 14. 
    The mouse, printers, and many other innovations central to the PC revolution came out of the Silicon Valley lab of
    • A. 

      Honeywell which chose not to exploit them because it was a controls company

    • B. 

      GE which chose not to exploit them because it was more interested in becoming a bank and a broadcasting network

    • C. 

      Netscape which was quickly overtaken by Microsoft and had no resources to exploit them

    • D. 

      Xerox which chose not to exploit them because it was a copying company

  • 15. 
    A Judo strategy rests on
    • A. 

      Staying on the radar to defeat an opponent that is prospecting for new business opportunities while reacting to losses that come about because of predictable business inflections

    • B. 

      Layering on product feature after product feature when struggling with large opponents whose underbellies are exposed to the encroachments of aggressive insurgents

    • C. 

      Engaging in simultaneous head-to-head combat with both large, diversified incumbents and small start-ups in adjacent businesses

    • D. 

      Maintaining the firm’s movement, balance, and leverage

  • 16. 
    Based on the experience of Monsanto and DuPont, commercializing a new technology like bioengineered seeds requires
    • A. 

      Aiming right away for products that achieve humanitarian goals

    • B. 

      Working first on consumers’ needs to have differentiated products like nutraceticals

    • C. 

      Disregarding farmers’ needs for enhanced yields

    • D. 

      Finding an initial market that offers the path of least resistance (e.g.animal feed.)

  • 17. 
    Whole Foods’ ban of HFC as an ingredient in the foods it sold
    • A. 

      Came about because of government study that warned of the dangers

    • B. 

      Came about after a careful scientific examination by Whole Food’s technical experts

    • C. 

      Came about when members of John Mackey’s were having obesity problems

    • D. 

      Was a result of customer complaints

  • 18. 
    When DuPont decided to move more deeply into the seed and agricultural protection business, it did all of the following except
    • A. 

      Divesting a large oil company (Conoco)

    • B. 

      Acquiring a seed company (Pioneer Hybrid.

    • C. 

      Adding profitable businesses to its textile division

    • D. 

      Proclaiming its intention to help feed the world’s hungry

  • 19. 
    Coke tends to dominate Pepsi in ______ markets, while Pepsi tends to dominate Coke in _______ markets.
    • A. 

      Global…Domestic….

    • B. 

      Domestic…Global….

    • C. 

      Local….Worldwide….

    • D. 

      Domestic ….Local….

  • 20. 
    The impact of rising ethanol prices on Monsanto are
    • A. 

      Positive

    • B. 

      Neutral

    • C. 

      Mildly negative

    • D. 

      Extremely negative

  • 21. 
    The most important reason why when a content company like Disney merges with a network like ABC, the network’s rankings tend to go down is
    • A. 

      The company’s expanded distribution channels do not reach niche sports markets

    • B. 

      Managerial hubris takes over and risk taking and creativity get out of hand

    • C. 

      The merged company takes on the shows of small fringe production studios that have little mainstream appeal

    • D. 

      The network may have to accept inferior programming from newly joined production studios

  • 22. 
    DuPont’s movement into agricultural productivity
    • A. 

      Thrust forward after its purchase of Pioneer Hi-Breed

    • B. 

      Advanced after its acquisition of Delta & Pine Land Company

    • C. 

      Made progress when its seeds, as opposed to Monsanto’s, were endorsed by Unilever, Nestle, and Cadbury

    • D. 

      Was benefitted by a refusal to license traits from Monsanto

  • 23. 
    _____ tends to result in markets where customers are willing to pay more for products because the products are better suited to their needs, more personalized, and more functional.
    • A. 

      Supplier centered purchases

    • B. 

      Precision based customer discounts

    • C. 

      Macro-based- applications

    • D. 

      Micro-segmenting

  • 24. 
    Until recently Monsanto has had an advantage over DuPont in the market for bioengineered seeds. This advantage was built on all of the following except
    • A. 

      Acquisitions of seed technology firms instead of seed marketing firms

    • B. 

      Technological dominance (its seeds had more traits than DuPont’s)

    • C. 

      Divestiture of its commodity chemical business (Solutia.

    • D. 

      More focus on the agricultural sector in comparison to DuPont

  • 25. 
    Increased demand for organics products
    • A. 

      Definitely is not in the interest of Monsanto and DuPont

    • B. 

      Definitely is in the interest of Monsanto and DuPont

    • C. 

      Has no effect on Monsanto and DuPont

    • D. 

      Depends on whether their tools for enhanced agricultural productivity can be applied to organic farming

  • 26. 
    In the early stages of the GMO seeds business
    • A. 

      There was no cooperation between competitors Monsanto, DuPont, and Syngenta

    • B. 

      Monsanto, DuPont, and Syngenta had licensing and other collaborative relations with each other

    • C. 

      Monsanto, DuPont, and Syngenta held back from suing each other for patent infringements

    • D. 

      Monsanto, DuPont, and Syngenta did not compete in R&D for new traits in corn, soybean, and other crops

  • 27. 
    Coke
    • A. 

      Has never shown that it really cares about climate change

    • B. 

      Has lobbied for climate change legislation in the U.S. Congress but has refused to disclose its global greenhouse gas emissions

    • C. 

      Shows concern for climate changes partially because of potential droughts that might threaten its water supply

    • D. 

      No longer recognizes climate change as a major issue under CEO Muhatir Kent

  • 28. 
    DuPont fought back against Monsanto’s early lead in GMOs by
    • A. 

      Trying to acquire every one of Monsanto’s main allies

    • B. 

      Working closely with Syngenta to dislodge Monsanto from leadership

    • C. 

      Spreading rumors about the harmfulness of Monsanto’s seeds to major activist organizations

    • D. 

      Aggressive R&D, marketing & promotion investment, and movement into Latin American grain markets

  • 29. 
    In the typical acquisition
    • A. 

      The acquired company’s stock soars while the acquiring company’s stock falters

    • B. 

      The acquiring company’s stock soars while the acquired company’s stock falters; the main reason is pre-acquisition bidding wars

    • C. 

      Neither the acquired company’s nor the acquiring company’s stock changes very much

    • D. 

      Overall shareholder wealth rapidly declines; the main reason is the increased competition

  • 30. 
    _____ are collections of disconnected businesses operating in the same company.
    • A. 

      Conglomerates

    • B. 

      Related-product firms

    • C. 

      Dominant-product firms

    • D. 

      Horizontally integrated firms

  • 31. 
    Growing concern about obesity led
    • A. 

      Both Walmart and Whole Foods to establish limits on how much sugar they allowed in their products

    • B. 

      Walmart to provide warnings to customers about sugar consumption and Whole Foods to ban sugar entirely

    • C. 

      Neither company to take any action

    • D. 

      Resulted in Whole Foods taking a strong stand against sugar while Walmart did nothing

  • 32. 
    Why was Wal-Mart attracted to the grocery industry?
    • A. 

      People tend to shop for groceries about once a week

    • B. 

      There were no serious contenders in this business

    • C. 

      Wal-Mart supply chain superiority could be used to assist it in international expansion

    • D. 

      Its labor practices could be easily transferred to global markets

  • 33. 
    Despite _____’s lead in recent quarterly revenue growth and margins, it has not had superior 5 year stock market performance over its GMO seed competitors mainly because of ____
    • A. 

      Dow…its commodity chemicals

    • B. 

      DuPont….its relative lack of focus

    • C. 

      Syngenta….its R&D weaknesses

    • D. 

      Monsanto…its inability to deal with activist opponents

  • 34. 
    _________ is a way to increase market share by purchasing companies that are in the same line of business
    • A. 

      Vertical integration

    • B. 

      Horizontal integration

    • C. 

      Diversification

    • D. 

      Liquidation

  • 35. 
    Shaping the future by means of radical innovation typically requires
    • A. 

      Patience on the part of resource providers

    • B. 

      Building an infrastructure of supportive laws and cultural norms as well as a foundation of solid science and technology

    • C. 

      Overcoming many unanticipated problems likely to surface on the way

    • D. 

      All of the above

  • 36. 
    According to economists like Frank Knight, conditions where the odds of success are not known with certainty are called
    • A. 

      Risk

    • B. 

      Uncertainty

    • C. 

      Probabilities

    • D. 

      Scope

  • 37. 
    Monsanto’s journey to sustainability
    • A. 

      Despite a stated intention to help eliminate global hunger was greeted by protests and opposition

    • B. 

      Was enthusiastically embraced by the environmental community and European NGOs

    • C. 

      Was stimulated by the company’s unwillingness to rely on taking cells of DNA from one organism and moving them to another to make the organism heartier and bug resistant

    • D. 

      Took off because the company acquired agricultural technology rather than agricultural marketing companies

  • 38. 
    The following was the main motive for acquisitions in the post-deregulation telecommunications industry
    • A. 

      Diversification to reduce risk

    • B. 

      Product and marketing innovation to allow for global expansion

    • C. 

      The combination of production and distribution to deter threats from competing technologies

    • D. 

      Consolidation to deal with growing competition

  • 39. 
    In the BCG matrix, SBUs that are high on internal strengths and high on external opportunities are
    • A. 

      Stars

    • B. 

      Cash cows

    • C. 

      Question marks

    • D. 

      Dogs

  • 40. 
    SodaStream posed a potential threat to Coke and Pepsi because
    • A. 

      It reduced the need for bottlers

    • B. 

      It had a stronger image for social responsibility than either of these companies

    • C. 

      It was allied with Monster, Red Bull, and other upstarts which were tearing apart the market dominance of the two beverage companies

    • D. 

      It had made substantial inroads in convenience stores, restaurants, and shopping malls

  • 41. 
    Since economists cannot attribute acquisitions to the creation of shareholder value, some economists have made the claim that they are a consequence of top management
    • A. 

      Modesty and fear

    • B. 

      Risk taking & respect for the future

    • C. 

      Altruism and imagination

    • D. 

      Status seeking and hubris

  • 42. 
    Today,  in the entertainment industry
    • A. 

      Every major studio continues to have a distribution outlet

    • B. 

      Fox and Columbia Pictures are the only studios that still have distribution outlets

    • C. 

      The studios that have divested their distribution outlets like Viacom have had poorer 5 year stock market performance than the studios that have maintained a vertically integrated model

    • D. 

      Time Warner, Disney, and now NBC Universal (Comcast) remain vertically integrated

  • 43. 
    The following is not an important reason for acquisition failure
    • A. 

      Post-acquisition integration

    • B. 

      Realizing the value of synergies

    • C. 

      Clashing cultures

    • D. 

      Short-term revenue growth

  • 44. 
    Whole Foods growth as a chain
    • A. 

      Hit an FTC roadblock when the company tried to acquire Wild Oats

    • B. 

      Was held back by Wild Oats aggressive criticism of the company in the blogosphere

    • C. 

      Was fueled by one hostile takeover after another

    • D. 

      Was financed by Saudi Arabian bankers

  • 45. 
    _________ = incremental innovation; while_____ =radical innovation
    • A. 

      Animal spirits….New variations of existing products

    • B. 

      Licensing …..Minor technical improvements

    • C. 

      New generations of existing products….. Animal spirits

    • D. 

      Minor technical improvements…. Licensing other firm’s inventions

  • 46. 
    The GE/McKinsey Matrix
    • A. 

      Uses barriers to entry and regulation as indicators of company strength

    • B. 

      Uses R&D and marketing capabilities as indicators of external opportunities

    • C. 

      Uses market share as an indicator of external opportunity and industry growth as an indicator of company strength

    • D. 

      Is more complex than the BCG matrix

  • 47. 
    New vegetable varieties like BellaFina
    • A. 

      Were almost definitive proof that the biotech revolution was enriching consumers with novel products that had superior attributes

    • B. 

      Showed that there were alternative ways to product innovation other than splicing genes from one organism to another

    • C. 

      Underperformed and were unappealing; they produced insignificant revenue for Monsanto

    • D. 

      Over performed and were surprisingly enticing and produced more revenue for Monsanto than it earned in any other way

  • 48. 
    According to Schumpeter, technological change is like a series of explosions, with innovations concentrating in specific sectors, so-called _____ industries that provide the momentum for growth.
    • A. 

      Conventional

    • B. 

      Traditional

    • C. 

      Leading-edge

    • D. 

      Customary

  • 49. 
    After the anti-trust settlement, the main owners of Wild Oats
    • A. 

      Bought a significant stake in Whole Foods

    • B. 

      Decided to restrict the brand’ to coop niches

    • C. 

      Pushed the brand into old A&Ps which it converted to low price health food stores

    • D. 

      Pushed the brand into Fred Meyer’s where it was sold as low price health food alternative

  • 50. 
    The carbonated soft drink industry faces serious threats from all of the following except
    • A. 

      Concerns about health and obesity

    • B. 

      Energy drinks and bottled water

    • C. 

      Loyal customers

    • D. 

      Private label products

  • 51. 
    For a(n) _______  the lesson judo strategy teaches is to "stay under the radar" for as long as possible.
    • A. 

      Incumbent

    • B. 

      Competitor

    • C. 

      Substitute

    • D. 

      New entrant

  • 52. 
    Per capita carbonated soft drink consumption in 2012 was greatest in
    • A. 

      The U.S.

    • B. 

      Pakistan

    • C. 

      Germany

    • D. 

      Mexico

  • 53. 
    Innovative market positions are
    • A. 

      Very limited since nearly every way of conceiving a market space already has been tried

    • B. 

      Very easy to find and even easier to move to

    • C. 

      Very hard to find but quite easy to enter

    • D. 

      Nearly limitless in number as firms can create infinite combinations of tangible and intangible qualities and bundle them into different value packages for customers; however actually moving into these spaces can be a daunting challenges

  • 54. 
    If a firm’s goals are growth and profitability then its strategic actions should be aimed toward _______ and _________.
    • A. 

      Exploitation & Liposuction

    • B. 

      Efficiency & Quality

    • C. 

      Cost cutting & Defense

    • D. 

      Exploration & Exploitation

  • 55. 
    Prior to its alliance with Wild Oats, Walmart
    • A. 

      Already had 1000s of organic items on its shelves

    • B. 

      Refused to allow any organics into its stores fearing that they would alienate its blue collar customers

    • C. 

      Expanded the supply chain for organic foods, made it more efficient, globalized it, increased its scale, and locked in many of the major suppliers of Whole Foods

    • D. 

      Had not made a major attempt to streamline the organic food supply chain since it was well-developed and very capable of supplying a mass market without Walmart’s assistance

  • 56. 
    Dollar weakness aids Coke at the expense of Pepsi because of its
    • A. 

      Greater global exposure

    • B. 

      Greater domestic exposure

    • C. 

      Greater product exposure

    • D. 

      Greater market turbulence

  • 57. 
    At General Mills acquisitions
    • A. 

      Were opportunistic; they did not originate in company strategy

    • B. 

      Were heavily dependent on the advice of investment bankers

    • C. 

      Never were accompanied by divestitures their single goal being to expand profits

    • D. 

      Only went forward after extensive due diligence that involved clarifying goals, considering alternatives, identifying and engaging targets, and dong, and redoing, the financials

  • 58. 
    Walmart
    • A. 

      Has given up on its efforts to make its supply chain partners more sustainable

    • B. 

      Is gearing up efforts to rank its suppliers on their sustainability performance

    • C. 

      Has been granted authority by the U.S. government to regulate its suppliers

    • D. 

      Will provide monetary incentives and other types of preferential treatment to suppliers for meeting their sustainability goals while punishing suppliers who fail to meet these goals

  • 59. 
    For major acquisitions, the General Mills’ acquisition of Pillsbury shows that FTC approval
    • A. 

      Is routine

    • B. 

      Can be a major stumbling block

    • C. 

      Is bureaucratic

    • D. 

      Is easy if the acquiring and acquired firm are in a similar business

  • 60. 
    John Mackey’s philosophy
    • A. 

      Is entirely consistent with the customer base of Whole Foods

    • B. 

      Has resulted in friction between the customer base and the company over issues like health care, unions, and climate change

    • C. 

      Has resulted in friction between the customer base and the company over issues like gay rights, abortion, and legalizing marijuana

    • D. 

      Has resulted in friction between Mackey and the board which has led the board to strip Mackey of all connection to the company

  • 61. 
    In new ventures, persistence is especially needed between takeoff and ______ since it is in this time frame that many founders give up.
    • A. 

      Maturity

    • B. 

      Decline

    • C. 

      Sustained growth

    • D. 

      Shakeout

  • 62. 
    Postindustrial societies differ from industrial societies in that there is a move from ____ to _____
    • A. 

      Services, goods

    • B. 

      Goods, services

    • C. 

      Goods, knowledge

    • D. 

      Knowledge, goods

  • 63. 
    Performance with a purpose
    • A. 

      Was Coke’s campaign to raise soft drink consumption in every market of the world by at least 2 percent

    • B. 

      Was Pepsi’s campaign to triple its sales of so-called healthier foods

    • C. 

      Was part of Coke’s campaign to end hunger in the world

    • D. 

      Was Pepsi’s campaign to ramp up marketing and advertising of its flagship cola

  • 64. 
    Which of the following is NOT a reason for firms to operate internationally?
    • A. 

      Better sources of raw materials and energy

    • B. 

      Access to low cost or skilled labor

    • C. 

      New markets

    • D. 

      All of the above are reasons to operate internationally

  • 65. 
    Which of the following is NOT a typical motivation behind mergers and acquisitions (M&As)?
    • A. 

      Expanding and growing markets

    • B. 

      Avoiding or halting declines

    • C. 

      Curtailing ongoing price wars

    • D. 

      All of the above are typical motivations

  • 66. 
    Coke’s market share in carbonated soft drinks was
    • A. 

      Greater than Pepsi’s in every market in the world

    • B. 

      Trailed Pepsi in the Middle East and Africa

    • C. 

      Trailed Pepsi in Pakistan and Egypt

    • D. 

      Exceeded the 50% mark in the U.S. and many other countries

  • 67. 
    A problem with portfolio planning models is that they typically do not sufficiently consider
    • A. 

      Internal strengths

    • B. 

      External opportunities

    • C. 

      Revenue growth

    • D. 

      Organizational synergies