City of Omaha 3rd Grade N.A.P.E. Stationary Engineers Test WITH CORRECT ANSWERS, Exams of Nursing

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Capstone Final Exam True or False

Review Questions WITH CORRECT

SOLUTIONS

False - CORRECT SOLUTION Wal-Mart exemplifies a firm pursuing a product-differentiation

strategy.

True - CORRECT SOLUTION Product differentiation is a business strategy whereby firms attempt to

gain a competitive advantage by increasing the perceived value of their products and services relative to the perceived value of other firms' products or services.

True - CORRECT SOLUTION While the U-Form structure for a firm pursuing cost leadership is

relatively simple, the U-Form structure for a firm implementing a product-differentiation strategy can be somewhat more complex.

True - CORRECT SOLUTION More recent work contradicts the argument about being "stuck in the

middle" and suggests that firms that are successful in both cost leadership and product differentiation often can expect to gain a sustained competitive advantage.

True - CORRECT SOLUTION A firm's level of vertical integration is the number of steps in its value

chain that the firm accomplishes within its boundaries.

False - CORRECT SOLUTION If Wal-Mart were to purchase a factory to make socks and it planned to

sell these socks in its stores, this would be an example of forward vertical integration.

True - CORRECT SOLUTION Transaction-specific investments make parties to an exchange

vulnerable to opportunism, and vertical integration solves this vulnerability problem.

True - CORRECT SOLUTION Flexibility refers to how costly it is for a firm to alter its strategic and

organizational decisions.

True - CORRECT SOLUTION A firm's vertical integration strategy is rare when few competing firms

are able to create value by vertically integrating in the same way.

True - CORRECT SOLUTION Strategic alliances are the major substitute for vertical integration.

False - CORRECT SOLUTION Vertical integration is a type of business-level strategy.

True - CORRECT SOLUTION When Apple, Inc. opened retail stores to sell its computers and iPods,

this was an example of forward vertical integration.

True - CORRECT SOLUTION A firm implements a corporate diversification strategy when it operates

in multiple industries or markets simultaneously.

True - CORRECT SOLUTION Firms that pursue a strategy of related corporate diversification have

some type of linkages among most of the different businesses they pursue.

True - CORRECT SOLUTION If all the businesses in which a firm operates share a significant number

of inputs, production technologies, distribution channels, similar customers, and so forth, this corporate diversification strategy is called related diversification.

True - CORRECT SOLUTION Economies of scope exist in a firm when the value of the products or

services it sells increase as a function of the number of businesses in which the firm operates.

True - CORRECT SOLUTION A firm engages in a merger when one corporation (the surviving

corporation) acquires all of the assets and liabilities of a target corporation, causing the target corporation to become defunct.

True - CORRECT SOLUTION When two or more corporations jointly become a completely new

corporation (the successor corporation), this reorganization is known as a consolidation.

True - CORRECT SOLUTION The most obvious economy of scope that may motivate firms to pursue

an international strategy is the potential new customers for a firm's current products or services that such a strategy might generate.

False - CORRECT SOLUTION A multi-national strategy stresses the need to gain economies of scale

by offering essentially the same products or services in each market.

True - CORRECT SOLUTION In an "inversion," a US company buys a smaller foreign rival and moves

legal home to lower-tax jurisdiction.