Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

Chapter 02 Corporate Strategy Decisions and Their Marketing Implications Multiple Choice Questions 1. Which of the follo ing strategy components address iss!es s!ch as the time frame in hich each target sho!ld "e attained and the target le#el of performance to "e achie#ed on each dimension$ %. Scope and mission &. De#elopment strategy C. '"(ecti#es D. So!rces of synergy %ns er) c *e#el of Diffic!lty) +asy ,age) -2. The principles of ..... in#ol#e meeting h!manity/s needs itho!t harming f!t!re generations. %. s!staina"ility &. re#ersi"ility C. specificity D. adapta"ility %ns er) a *e#el of Diffic!lty) +asy ,age) -0 -. What is the e1pansion for the acronym SM%2T !sed in specifying corporate o"(ecti#es$ %. Specific3 Meas!ra"le3 %ttaina"le3 2ele#ant3 and Time-"o!nd &. Str!ct!red3 Managea"le3 %ccepta"le3 2elated3 and Theoretical C. Standardi4ed3 Managea"le3 %cco!nta"le3 2ele#ant3 and Targeted D. Str!ct!red3 Marketa"le3 %cco!nta"le3 2e!sa"le3 and Targeted %ns er) a *e#el of Diffic!lty) Medi!m ,age) -5 6. Which of the follo ing inde1es is !sed to meas!re the profita"ility criterion$ %. ,ercentage change in sales &. 2et!rn on net assets C. ,rice7earnings ratio D. ,ercentage cost sa#ings from ne processes %ns er) " *e#el of Diffic!lty) +asy ,age) -5 0. Which of the follo ing performance criteria is assessed !sing the meas!res of market share3 "rand a areness3 and "rand preference$
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Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

%. ,rofita"ility &. Contri"!tion to o ners C. Competiti#e strength D. 9ro th %ns er) c *e#el of Diffic!lty) +asy ,age) -5 <. In e1pressing corporate o"(ecti#es aimed at enhancing shareholder #al!e3 a firm com"ining its de"t and market #al!e of its stock3 and then s!"tracting the capital in#ested in the company3 is !sing the ..... approach. %. ret!rn on capital &. economies of scale C. economic #al!e added D. cash con#ersion cycle %ns er) c *e#el of Diffic!lty) Medi!m ,age) 60 =. The calc!lated market #al!e added >M?%@ for Triptych Inc. is positi#e. Which of the follo ing is indicated "y this res!lt$ %. The amo!nt of ealth the company has created &. The amo!nt of de"t the company has acc!m!lated C. The total amo!nt of reso!rces a#aila"le to the company D. The s!ccess of the company/s efforts at s!staina"ility %ns er) a *e#el of Diffic!lty) :ard ,age) 60 A. % c!stomer feed"ack s!r#ey cond!cted "y an a!to dealer fo!nd that a"o!t =0 percent of c!stomers reported satisfaction ith the order processing3 deli#ery3 and post-sale ser#ices. This indicates that) %. c!stomer satisfaction increases d!e to the prod!ct-oriented approach. &. spending more on emphasi4ing prod!ct feat!res creates a s!staina"le competiti#e ad#antage. C. c!stomer satisfaction is infl!enced "y factors other than the prod!ct itself. D. c!stomer intimacy is the least important factor in determining c!stomer satisfaction. %ns er) c *e#el of Diffic!lty) Medi!m ,age) 61 5. Which of the follo ing strategies is most likely to "e !sed "y a company that is trying to increase its market share for its c!rrent prod!cts in the c!rrent market$ %. Di#ersification &. Market penetration
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Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

C. Market de#elopment D. ,rod!ct de#elopment %ns er) " *e#el of Diffic!lty) +asy ,age) 610. In order to e1pand3 Medio.com >an e-tailer@ p!rs!ed a com"ination of actions s!ch as making ser#ice impro#ements3 c!tting costs as ell as forming alliances ith We" portals to e1pand its share of We" shoppers. This is an e1ample of e1pansion "y) %. di#ersifying. &. offshoring. C. de#eloping ne prod!cts for c!rrent c!stomers. D. increasing market penetration of c!rrent prod!ct. %ns er) d *e#el of Diffic!lty) :ard ,age) 611. % corporate gro th strategy that foc!ses on de#eloping ne prod!cts for c!rrent markets is called) %. a market penetration strategy. &. a prod!ct de#elopment strategy. C. a market de#elopment strategy. D. a prod!ct positioning strategy. %ns er) " *e#el of Diffic!lty) +asy ,age) 612. Stepan Cleansers Inc. s!ccessf!lly introd!ced a #ariety of detergents for ashing clothes3 dishes3 and carpets. +ach #ariety of detergent capitali4ed on the !se of "aking soda as an effecti#e deodori4er. The ne detergents ere promoted in e1isting markets here cons!mers had a high le#el of recognition of the "rand. This e1ample ill!strates the !se of a) %. market penetration strategy. &. di#ersification strategy. C. prod!ct de#elopment strategy. D. market de#elopment strategy. %ns er) c *e#el of Diffic!lty) :ard ,age) 6--66 1-. Theaters3 orchestras3 and other performing arts organi4ations often reach a!diences o!tside ma(or metropolitan areas "y promoting matinee performances at lo er prices and free transportation to attract senior citi4ens and st!dents. Identify the strategy "eing employed in this case. %. +1pansion "y di#ersifying &. +1pansion "y selling e1isting prod!cts to ne segments

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Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

C. +1pansion "y de#eloping ne prod!cts for c!rrent c!stomers D. +1pansion "y increasing penetration of c!rrent prod!ct-markets %ns er) " *e#el of Diffic!lty) :ard ,age) 66 16. % processed-meat man!fact!rer is mo#ing do nstream in terms of prod!ct flo "y la!nching a chain of retail o!tlets. Which di#ersification strategy is "eing !sed "y the company$ %. Bor ard #ertical integration &. 2elated di#ersification C. &ack ard integration D. Cnrelated di#ersification %ns er) a *e#el of Diffic!lty) Medi!m ,age) 66 10. Baced ith a decline in its c!rrent "!siness3 a generic dr!g man!fact!rer is planning a foray into the design and man!fact!re of re-locata"le str!ct!res. Which di#ersification strategy is "eing employed "y the company$ %. 2elated di#ersification &. &ack ard integration C. Bor ard #ertical integration D. Cnrelated di#ersification %ns er) d *e#el of Diffic!lty) :ard ,age) 60 1<. Cash co s are) %. "!sinesses ith a high relati#e share of lo -gro th markets. &. lo -share "!sinesses in lo -gro th markets. C. market leaders in a high-gro th ind!stry. D. "!sinesses in high-gro th ind!stries ith lo relati#e market shares. %ns er) a *e#el of Diffic!lty) +asy ,age) 6= 1=. *o -share "!sinesses in lo -gro th markets are called ..... "eca!se altho!gh they may thro off some cash3 they typically generate lo profits3 or losses. %. stars &. D!estion marks C. cash co s D. dogs %ns er) d *e#el of Diffic!lty) +asy ,age) 6A
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Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

1A. Which of the follo ing is a limitation of the gro th-share matri1$ %. Since the matri1 !ses m!ltiple #aria"les as a "asis for categori4ing a firmEs "!siness3 it is comple1 to !nderstand. &. '!tcomes of this analysis are highly sensiti#e to #ariations in ho gro th and share are meas!red. C. It fails to analy4e the impact of in#esting reso!rces in different "!sinesses on the firmEs f!t!re earnings. D. The model fails to consider that firms can generate cash from "!sinesses ith strong competiti#e positions in mat!re markets. %ns er) " *e#el of Diffic!lty) Medi!m ,age) 6A 15. Which of the follo ing pro#ides a "asis for comparing the economic ret!rns to "e gained from in#esting in different "!sinesses p!rs!ing different strategies or from alternati#e strategies that might "e adopted "y a gi#en "!siness !nit$ %. ?al!e-"ased planning &. &C9 gro th matri1 C. Corporate mission statement D. &ack ard integration %ns er) a *e#el of Diffic!lty) +asy ,age) 65 20. Identify a limitation of #al!e-"ased planning. %. It attempts to assess the economic #al!e a gi#en strategy is likely to generate "y relying on distorted acco!nting meas!res. &. It is typically a tool for e#al!ating strategy alternati#es identified and de#eloped thro!gh managersE (!dgments. C. It fails to assess the shareholder #al!e a gi#en strategy is likely to generate. D. It fails to pro#ide a "asis for comparing the economic ret!rns to "e gained from in#esting in different "!sinesses p!rs!ing different strategies. %ns er) " *e#el of Diffic!lty) Medi!m ,age) 00 21. Which of the follo ing is typically a part of !sing c!stomer eD!ity to estimate the #al!e of alternati#e marketing actions$ %. Borecasting the costs inc!rred in promoting prod!cts &. Calc!lating the lifetime #al!es of each of its c!stomers C. %ssessing the shareholder #al!e of each marketing action D. Disco!raging c!stomer intimacy

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Chapter 02 - Corporate Strategy Decisions and Their Marketing Implications

%ns er) " *e#el of Diffic!lty) Medi!m ,age) 01 Essay Questions 22. What are the components of s!staina"le competiti#e ad#antage at the corporate le#el$ %ns er) It is "ased on company reso!rces3 reso!rces that other firms do not ha#e3 that take a long time to de#elop3 and that are hard to acD!ire. Bor e1ample3 highly de#eloped information systemsF e1tensi#e market research operations3 and7or cooperati#e long-term relationships ith c!stomers3 a "rand name that c!stomers recogni4e and tr!stF cooperati#e alliances ith s!ppliers or distri"!tors that enhance efficiencyF or a "ody of satisfied and loyal c!stomers ho are predisposed to "!y related prod!cts or ser#ices. *e#el of Diffic!lty) Medi!m ,age) 61-62 2-. :o can c!stomer eD!ity "e !sed to estimate the #al!e of alternati#e marketing actions$ %ns er) This approach calc!lates the economic ret!rn for a prospecti#e marketing initiati#e "ased on its likely impact on the firmEs c!stomer eD!ity3 hich is the s!m of the lifetime #al!es of its c!rrent and f!t!re c!stomers. The impact of a firmEs past marketing actions on c!stomer eD!ity can "e statistically estimated from historical data. This ena"les managers to identify the financial impact of alternati#e marketing G#al!e dri#ersG of c!stomer eD!ity3 s!ch as "rand ad#ertising3 D!ality or ser#ice impro#ements3 and loyalty programs. 'nce a manager calc!lates the implementation costs and capital reD!irements in#ol#ed3 it is possi"le to estimate the financial ret!rn for any similar marketing initiati#e in the near f!t!re. *e#el of Diffic!lty) Medi!m ,age) 01-02 26. What are the #ario!s so!rces of synergy for a firm$ %ns er) There are three so!rces of synergies namely3 kno ledge-"ased3 corporate identity and the corporate "rand3 and shared reso!rces. Hno ledge-"ased) The performance of one "!siness can "e enhanced "y the transfer of competencies3 kno ledge3 or c!stomer-related intangi"les s!ch as "rand-name recognition and rep!tation from other !nits ithin the firm. Corporate identity and the corporate "rand) Corporate identity can help a firm stand o!t from its competitors and gi#e it a s!staina"le ad#antage in the market. Corporate identity flo s from the comm!nications3 impressions3 and personality pro(ected "y an organi4ation. 'ne rationale for a !niD!e corporate identity programs is that they can generate synergies that enhance the effecti#eness and efficiency of the firmEs marketing efforts for its indi#id!al prod!ct offerings. Shared reso!rces) Corporate synergy is inherent in sharing operational reso!rces3 facilities3 and f!nctions across "!siness !nits. :o e#er3 the sharing of operational facilities and f!nctions may not prod!ce positi#e synergies for all "!siness !nits. *e#el of Diffic!lty) Medi!m ,age) 02-06
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