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10 Cards in this Set

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A corporate advantage occurs when a firm:




a. maximizes its resources to build a competitive advantage across its various business lines.


b. builds its core competencies in a particular business in order to increase its profits.


c. introduces new products in a product category in order to provide more choice for its customers.


d. introduces a new brand logo and package design for its most successful product in a division.

A.) maximizes its resources to build a competive advantage across its various business lines.

_______ is defined as a strategy in which a firm engages in several different businesses that may or may not be related in order to create more value than if the businesses existed as stand-alone entities.




a. Focus


b. Cost leadership


c. Diversification


d. Outsourcing

C.) Diversification

Horizontal diversification is also known as ________ .




a. unrelated diversification


b. vertical disintegration


c. related diversification


d. a single-product strategy

C.) related diversification

The choice between related or unrelated diversification often results from an assessment of:




a. the supply-chain efficiency of a firm.


b. the stability of the market.


c. a demand-supply graph.


d. the resources of a firm.

D.) the resources of a firm

________ exist when the costs of operating two or more businesses are less than the costs of operating the businesses independently.




a. Economies of scale


b. Economies of agglomeration


c. Economies of disagglomeration


d. Economies of scope

D.) economies of scope

________ involve(s) the cost savings that a firm achieves through the distribution of capital among different business units.




a. Externality


b. Market power


c. Financial economies


d. Economies of scale

C.) financial economies

The test that a manager can use to determine the viability of international diversification involves two components—a "better off" test and a(n):




a. strategy test.


b. motivation test.


c. ownership test.


d. resource test.

C.) ownership test

A firm can pass the "better-off" component of an international scope test if its international diversification strategy offers:




a. factor competition.


b. factor brand strategy.


c. factor cost differences.


d. factor market entry.

Forward integration occurs when a firm:




a. acquires businesses that are unrelated to its core product.


b. owns or controls the distribution channels for its main products.


c. manufactures its own raw materials for making its finished products.


d. conducts market research internally.

B.) owns or controls the distribution channels for its main products.

Which of the following is a disadvantage of vertical integration?




a. Lack of quality control


b. Lack of strategic flexibility


c. Lack of coordination


d. Lack of access to technology


C.) lack of strategic flexibility