David_TIF_Ch05 - 91 CHAPTER 5 Strategies in Action...

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CHAPTER 5 Strategies in Action True/False Long-Term Objectives 1. Long-term objectives represent the results expected from pursuing certain strategies. Ans: T Page: 168 2. Objectives provide direction and allow for organizational synergy. Ans: T Page: 168 3. Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins and improved cash flow. Ans: F Page 169 4. Strategic objectives include larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals. Ans: T Page: 169 5. “If it ain’t broke, don’t fix it” refers to managing by crisis. Ans: F Page: 170 6. The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives. Ans: F Page: 170 7. Since a combination strategy is not risky, many organizations pursue a combination of two or more strategies simultaneously. Ans: F Page: 171 8. Horizontal integration is seeking ownership or increased control over competitors. Ans: T Page 173 91
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9. Divestiture is selling all of a company’s assets, in parts, for their tangible worth. Ans: F Page 173 10. A chief executive officer is located in the divisional level of a large firm. Ans: F Page: 174 I ntegration Strategies 11. Gaining ownership or increased control over distributors or retailers is called forward integration strategy. Ans: T Page: 174 12. Franchising is an effective means of implementing forward integration. Ans: T Page: 174 13. A growing trend is for franchisers to buy out their part of the business from their franchisees. Ans: F Page: 175 14. 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. Ans: T Page: 175 15. A strategy of seeking ownership or increased control of a firm’s supplier is backward integration. Ans: T Page: 175 16. 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 horizontal integration strategy. Ans: F Page: 176 17. Horizontal integration is an appropriate strategy when the competitors of an organization are doing poorly. Ans: F Page: 176 92
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Intensive Strategies 18. Market penetration, market development, product development and joint venture are intensive strategies. Ans: F Page: 177 19. When the correlation between dollar sales and dollar marketing expenditures has historically been low, market penetration is an appropriate strategy. Ans: F Page: 178 20. Market development includes introducing present products into new geographic areas. Ans: T
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David_TIF_Ch05 - 91 CHAPTER 5 Strategies in Action...

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