BADM Ch7 Exam Solved
Adam's boss tells him that their company is pursuing a strategy of horizontal integration.
Which of the following should Adam expect?
a) His company will acquire one of its suppliers.
b) His company will reorganize into fewer business units.
c) His company will begin to distribute its own products.
d) His company will buy one of its rivals
e) His company will centralize all of its support functions. - Answer- d) His company will
buy one of its rivals
Observing the pattern of consolidation in U.S. industries over time, one will notice that
a) horizontal integration has never been a very popular strategy.
b) firms that horizontally integrate tend to divest later.
c) horizontal integration has been very popular in the last two decades.
d) while a few industries have consolidated since 1970, most remain fragmented.
e) mergers were very common and acquisitions were rare from 1900 to 1999. - Answer-
c) horizontal integration has been very popular in the last two decades.
Which of the following is not an example of horizontal integration?
a) America Online and Time Warner merge to become AOL Time Warner.
b) Coca Cola buys most of its previously independent bottling firms.
c) Microsoft acquires Rare, Ltd., maker of video games such as Donkey Kong.
d) Georgia Pacific, a wood products firm, is combining operations with another wood
products firm, Louisiana Pacific.
e) Citicorp Bank and Travelers Insurance merge to form Citigroup, a diversified provider
of financial services. - Answer- b) Coca Cola buys most of its previously independent
bottling firms.
Managers who pursue _______________ have decided the best way to increase
company profits is to purchase the resources and assets of industry competitors.
a) horizontal integration
b) vertical integration.
c) strategic alliances
d) franchising.
e) diversification. - Answer- a) horizontal integration
Horizontal integration does not help firms
a) lower operating costs.
b) schedule supply chain processes.
c) reduce rivalry within an industry.
d) increase bargaining power over suppliers and buyers.
e) increase product differentiation. - Answer- b) schedule supply chain processes.
, Which of the following is a benefit that firms should expect to gain from the use of
horizontal integration?
a) Expanded control over stages of the supply chain
b) Lower operating costs as a result of economies of scale
c) Shared risk with another firm
d) Reduced risk of holdup
e) Reduced investments in noncore activities - Answer- b) Lower operating costs as a
result of economies of scale
Concentrating on a single business allows a company to _____________________.
a) increase profits.
b) lower operating costs.
c) stick to the knitting.
d) increase its competitive advantage.
e) decrease its human resource turnover. - Answer- b) lower operating costs.
A merger is an agreement between _________________ companies to pool their
operations and create a new business entity.
a) three
b) four
c) five
d) two
e) none of the above - Answer- d) two
Antitrust regulation
a) favors large companies.
b) reduces industry competition.
c) is concerned with companies' abuse of their market power to raise prices for
consumers above the level that would exist in more competitive situations.
d) tends to raise prices for consumers.
e) enables the achievement of market power. - Answer- c) is concerned with companies'
abuse of their market power to raise prices for consumers above the level that would
exist in more competitive situations.
Outsourcing occurs when a firm
a) buys one of its rivals.
b) merges with one of its suppliers.
c) enters into a joint venture with a rival.
d) hires another firm to perform value-creation activities on its behalf.
e) enters into contracts with two suppliers simultaneously. - Answer- d) hires another
firm to perform value-creation activities on its behalf.
Horizontal integration supports the achievement of a __________ strategy.
a) cost leadership
b) cost leadership and differentiation
c) focus
Adam's boss tells him that their company is pursuing a strategy of horizontal integration.
Which of the following should Adam expect?
a) His company will acquire one of its suppliers.
b) His company will reorganize into fewer business units.
c) His company will begin to distribute its own products.
d) His company will buy one of its rivals
e) His company will centralize all of its support functions. - Answer- d) His company will
buy one of its rivals
Observing the pattern of consolidation in U.S. industries over time, one will notice that
a) horizontal integration has never been a very popular strategy.
b) firms that horizontally integrate tend to divest later.
c) horizontal integration has been very popular in the last two decades.
d) while a few industries have consolidated since 1970, most remain fragmented.
e) mergers were very common and acquisitions were rare from 1900 to 1999. - Answer-
c) horizontal integration has been very popular in the last two decades.
Which of the following is not an example of horizontal integration?
a) America Online and Time Warner merge to become AOL Time Warner.
b) Coca Cola buys most of its previously independent bottling firms.
c) Microsoft acquires Rare, Ltd., maker of video games such as Donkey Kong.
d) Georgia Pacific, a wood products firm, is combining operations with another wood
products firm, Louisiana Pacific.
e) Citicorp Bank and Travelers Insurance merge to form Citigroup, a diversified provider
of financial services. - Answer- b) Coca Cola buys most of its previously independent
bottling firms.
Managers who pursue _______________ have decided the best way to increase
company profits is to purchase the resources and assets of industry competitors.
a) horizontal integration
b) vertical integration.
c) strategic alliances
d) franchising.
e) diversification. - Answer- a) horizontal integration
Horizontal integration does not help firms
a) lower operating costs.
b) schedule supply chain processes.
c) reduce rivalry within an industry.
d) increase bargaining power over suppliers and buyers.
e) increase product differentiation. - Answer- b) schedule supply chain processes.
, Which of the following is a benefit that firms should expect to gain from the use of
horizontal integration?
a) Expanded control over stages of the supply chain
b) Lower operating costs as a result of economies of scale
c) Shared risk with another firm
d) Reduced risk of holdup
e) Reduced investments in noncore activities - Answer- b) Lower operating costs as a
result of economies of scale
Concentrating on a single business allows a company to _____________________.
a) increase profits.
b) lower operating costs.
c) stick to the knitting.
d) increase its competitive advantage.
e) decrease its human resource turnover. - Answer- b) lower operating costs.
A merger is an agreement between _________________ companies to pool their
operations and create a new business entity.
a) three
b) four
c) five
d) two
e) none of the above - Answer- d) two
Antitrust regulation
a) favors large companies.
b) reduces industry competition.
c) is concerned with companies' abuse of their market power to raise prices for
consumers above the level that would exist in more competitive situations.
d) tends to raise prices for consumers.
e) enables the achievement of market power. - Answer- c) is concerned with companies'
abuse of their market power to raise prices for consumers above the level that would
exist in more competitive situations.
Outsourcing occurs when a firm
a) buys one of its rivals.
b) merges with one of its suppliers.
c) enters into a joint venture with a rival.
d) hires another firm to perform value-creation activities on its behalf.
e) enters into contracts with two suppliers simultaneously. - Answer- d) hires another
firm to perform value-creation activities on its behalf.
Horizontal integration supports the achievement of a __________ strategy.
a) cost leadership
b) cost leadership and differentiation
c) focus
