Forward integration is used by firms to gain control or ownership of suppliers.

The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives.

Horizontal integration is seeking ownership or increased control over competitors.

Gaining ownership or increased control over distributors or retailers is called forward integration strategy

Forward integration strategy is especially effective when the availability of quality distributors is so limited as to offer a competitive advantage to those firms that integrate forward.

A strategy of seeking ownership or increased control of a firm’s supplier is backward integration

If a firm’s present suppliers are expensive and unreliable in meeting the firm’s needs for parts, components and/or raw materials, the firm should pursue a Backward integration strategy.

1. Market development includes introducing present products into new geographic areas.

Most companies favor related diversification strategies in order to exploit common use of a well-known brand name.

The related diversification strategy is effective when an organization has a weak management team.

AT&T’s acquisition of BellSouth in 2007 was the largest telecommunications acquisition ever approved in the U.S.

Unrelated diversification is an appropriate strategy when an organization’s present channels of distribution can be used to market the new products to current customers.

Morgan Stanley’s building of a casino in Atlantic City is a good example of related diversification.

All of the following are important factors in the Balanced Scorecard except:
a. customer service.
b. employee morale.
c. product quality.
d. business ethics.
e. stockholder equity.

Southwest Airlines selling tickets through Galileo is an example of which type of strategy?
a. forward integration
b. backward integration
c. horizontal integration
d. related diversification
e. unrelated diversification

Whirlpool selling its struggling Hover floor-care business to Techtronic Industries is an example of which type of strategy?
a. related diversification
b. unrelated diversification
c. retrenchment
d. divestiture
e. liquidation

Burger King opening its first restaurant in Japan is an example of which type of strategy?
a. forward integration
b. backward integration
c. horizontal integration.
d. market development
e. product development

Web sites to sell products directly to consumers are examples of which type of strategy?
a. backward integration
b. product development
c. forward integration
d. horizontal integration
e. conglomerate diversification

In which situation would horizontal integration be an especially effective strategy?
a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.
b. When an organization competes in a slowing industry.
c. When decreased economies of scale provide major competitive advantages.
d. When an organization has neither the capital nor human talent needed to successfully manage an expanded organization.
e. When competitors are succeeding due to managerial expertise or having particular resources an organization possesses.

a. When an organization can gain monopolistic characteristics in a particular area or region without being challenged by the federal government for “tending substantially” to reduce competition.

When a domestic company first begins to export to India, it is an example of
a. horizontal integration.
b. backward integration.
c. forward integration.
d. concentric diversification.
e. market development.

Nortel cutting another 2,900 jobs in 2007 in an attempt to stay in business would be an example of:
a. divestiture.
b. backward integration.
c. liquidation.
d. retrenchment.
e. forward integration.

What kind of strategy is retrenchment?
a. A turnaround or reorganization strategy
b.An expansion strategy
c. A conglomerate strategy
d. An intensive strategy
e. An offensive strategy

a. A turnaround or reorganization strategy

The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix and the Grand Strategy Matrix are included in stage two of the strategy-formulation framework.

The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit.

In a BCG Matrix the pie slice indicates the proportion of corporate profits generated by that division.

Cash cows represent the organization’s best long-run opportunities for growth and profitability.

The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization’s various divisions.

Viewing businesses as star, cash cow, dog or question mark is an oversimplification.

Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm.

Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages.

Boards of directors are composed mostly of outsiders who are becoming more involved in an organization’s strategic management.

The Sarbanes-Oxley Act put an end to the “country-club” atmosphere of most boards and has shifted power from CEOs to directors.

What type of strategy would divestiture be classified as?
a. Aggressive
b. Defensive
c. Competitive
d. Offensive
e. Conservative

For what type of company is the BCG Matrix ideal for analyzing?
a. Companies with more than one division
b. All companies
c. Companies with annual sales greater than $1 million
d. Companies with annual sales of less than $1 million
e. Large companies

a. Companies with more than one division (Chapter 6)

In the BCG Matrix, which element represents the industry growth rate in sales, measured in percentage terms?
a. x-axis
b. y-axis
c. first quadrant
d. second quadrant
e. third quadrant

How would a division with a low relative market share position in a high growth industry be described?
a. question mark
b. cash cow
c. star
d. stuck-in-the-middle
e. dog

a. question mark (Chapter 6)

Which strategy would be most appropriate for a company classified as a Dog?
a. market penetration
b. market development
c. product development
d. retrenchment
e. forward integration

d. retrenchment (Chapter 6)

According to the Grand Strategy Matrix, which strategy is recommended for a firm with rapid market growth and a strong competitive position?
a. Market penetration
b. Conglomerate diversification
c. Joint venture
d. Retrenchment
e. Liquidation

a. Market penetration (Chapter 6)

The act of oversight and direction for an organization is referred to as
a. corporate lawmaking.
b. centralized control.
c. organizational direction.
d. establishing norms.
e. governance.

e. governance. (Chapter 6)

All of the following are principles of good organizational governance, as established by Business Week, except:
a. No directors do business with the company or accept consulting or legal fees from the firm.
b. The audit, compensation and nominating committees are made up solely of outside c. directors.
c. Each director owns a large equity stake in the company, excluding stock options.
d. At least two directors are current or former company executives.
e. The CEO is not also the Chairperson of the Board.

d. At least two directors are current or former company executives. (Chapter 6)

What is the purpose of forward integration?

What is forward integration by suppliers?

What integration strategy is used by firms to gain control or ownership of suppliers?

What are the benefits of forwarding integration?