An advantage of horizontal integration is that it can lower a company's cost structure by creating increasing economies of scale.

Select one:

True

False

A merger occurs when one company uses its capital resources, such as stock, debt, or cash, to purchase another company.

Select one:

True

False

Tina's Technologies is expanding its operations backward into an industry that produces inputs for the company's products. Tina's Technologies is utilizing horizontal integration.

Select one:

True

False

Companies that outsource most or all of their value creation activities are often referred to as virtual corporations.

Select one:

True

False

A company should first choose a corporate-level strategy, and then look at how changes will affect a company's current business model and strategies.

Select one:

True

False

When a bank offers home mortgages and credit cards to its checking account customers, it is using horizontal integration strategy.

Select one:

True

False

Vertical integration can be risky when demand is unpredictable because it is hard to manage the volume or flow of products along the value-added chain.

Select one:

True

False

When a company outsources its noncore activities to specialists, it loses its capabilities to differentiate its final products.

Select one:

True

False

Horizontal integration can lead to low cost advantages but rarely to differentiation advantages.

Select one:

True

False

Unfortunately, horizontal integration can not be accomplished by acquisitions or mergers.

Select one:

True

False

The final part of the strategy formulation process is

Select one:

a.choosing business-level strategies.

b.choosing business-level goals.

c.choosing corporate-level strategies.

d.choosing functional-level goals.

e.choosing functional-level strategies.

Which of the following is NOT a benefit of vertical integration?

Select one:

a.Improved scheduling

b.Facilitated investments in specialized assets

c.An increase in market share

d.Enhanced product quality

e.Strengthened differentiation advantage

Long-term agreements between two or more companies to jointly develop new products or processes that benefit all of the companies involved in the agreement are known as

Select one:

a.outsourcing.

b.vertical integration.

c.joint venture.

d.strategic alliance.

e.horizontal integration.

_______ is the process of acquiring or merging with industry competitors to achieve the competitive advantages.

Select one:

a.Tapered integration

b.Vertical integration

c.Franchising

d.Horizontal integration

e.Diversification

Under which of the following circumstances is vertical integration considered hazardous?

Select one:

a.When the industries involved are undergoing rapid expansion

b.When vertical integration involves moving downstream into retailing

c.When the demand for the product fluctuates frequently

d.When the company's competitors are also following a strategy of vertical integration

e.When the value added by successive stages of production is declining

Strategic alliances are

Select one:

a.long-term commitments between two companies to share research and development activities.

b.short-term agreements between two companies to jointly develop new products.

c.short-term partnerships between two companies.

d.long-term agreements between two or more companies to jointly develop products that benefit all companies involved in the alliance.

e.short-term agreements between two companies to jointly market new products that benefit all companies involved in creating the product.

Horizontal integration may be thought of as

Select one:

a.staying inside the industry in which the company currently operates.

b.moving into a new unrelated industry.

c.gaining control of distributors.

d.giving control to suppliers.

e.combining functional units within the company.

To build trust in a cooperative relationship, both firms can

Select one:

a.rely on competitive bidding.

b.make mutual investments in specialized assets.

c.use outsourcing of noncore activities.

d.write short-term contracts that must be renewed frequently.

e.increase their vertical integration.

Outsourcing occurs when a firm

Select one:

a.buys one of its rivals.

b.merges with one of its suppliers.

c.hires another firm to perform value creation activities.

d.enters into contracts with two suppliers simultaneously.

e.enters into a joint venture with a rival.

Outsourcing

Select one:

a.reduces the firm's dependence on its value chain.

b.moves some value chain activities outside the firm.

c.reorders the steps in a firm's value chain.

d.strengthens the firm's capabilities in each value chain function.

e.eliminates the need for a value chain.