MBA 705 -Ch 6 & 7 Practice Exam and
All Correct Answers 2026 Update.
acquisition - Answer A form of a merger whereby one firm purchases another, often with a
combination of cash and stock.
Backward Integration - Answer A firm's acquisition of its suppliers
BCG Growth-Share Matrix - Answer A corporate portfolio framework developed by the
Boston Consulting Group that categorizes a firm's business units by the market share that they
hold and the growth rate of their respective markets
Conglomerate (Unrelated) Diversification - Answer a form of diversification in which a firm
acquires a business to reduce cyclical fluctuations in cash flows or revenues
core competencies - Answer The firm's key capabilities and collective learning skills that are
fundamental to its strategy, performance, and long-term profitability
Corporate Profile: - Answer Identification of the industry or industries in which a firm
operates
Corporate-Level Strategy: - Answer The strategy that top management formulates for the
overall company
Divestment - Answer A corporate-level retrenchment strategy in which a firm sells one or
more of its business units.
External Growth - Answer A corporate-level growth strategy whereby a firm acquires other
companies.
Forward Integration: - Answer A firm's acquisition of one or more of its buyers
Growth Strategy: - Answer A corporate-level strategy designed to increase revenues, and
ultimately profits and/or market share
Horizontal Integration - Answer a form of acquisition in which a firm expands by acquiring
other companies in its same line of business.
,Horizontal Related Diversification - Answer A form of diversification in which a firm acquires a
business outside its present scope of operation but with similar or related core competencies
Internal Growth - Answer A corporate-level growth strategy in which a firm expands by
internally increasing its size and sales rather than by acquiring other companies
International Franchising - Answer A form of licensing in which a local franchisee pays a
franchiser in another country for the right to use the franchiser's brand names, promotions,
materials, and procedures.
International Licensing: - Answer An arrangement whereby a foreign licensee purchases the
rights to produce a company's products and/or use its technology in the licensee's country for a
negotiated fee structure.
Liquidation - Answer A corporate-level retrenchment strategy in which a firm terminates one
or more of its business units by the sale of their assets
Merger - Answer A corporate-level growth strategy in which a firm combines with another
firm through an exchange of stock.
Retrenchment Strategy - Answer A corporate-level strategy designed to reduce the size of the
firm
Stability Strategy - Answer A corporate-level strategy intended to maintain a firm's present
size and current lines of business
Strategic Alliances: - Answer A corporate-level growth strategy in which two or more firms
agree to share the costs, risks, and benefits associated with pursuing new business
opportunities. Strategic alliances are often referred to as partnerships
Synergy - Answer When the combination of two firms results in higher efficiency and
effectiveness than would otherwise be achieved by the two firms separately
Turnaround - Answer A corporate-level retrenchment strategy intended to transform the firm
into a leaner and more effective business by reducing costs and rethinking the firm's product
lines and target markets.
Vertical Integration - Answer A form of integration in which a firm expands by acquiring a
company in the distribution channel.
, Business Strategy: - Answer A strategy delineating how a business unit competes with its
rivals; also called competitive strategy.
Business Unit - Answer An organizational entity with its own unique mission, set of
competitors, and industry
Competitive Advantage: - Answer A state whereby a business unit's successful strategies
cannot be easily duplicated by its competitors.
Differentiation Strategy - Answer A generic business unit strategy in which a larger business
produces and markets to the entire industry products or services that can be readily
distinguished from those of its competitors.
First-Mover Advantages - Answer Benefits derived from being the first firm to offer a new or
modified product or service.
Focus-Differentiation Strategy - Answer A generic business unit strategy in which a smaller
business produces highly differentiated products or services for the specialized needs of a
market niche.
Focus—Low-Cost-Differentiation Strategy: - Answer A generic business unit strategy in which
a smaller business produces highly differentiated products or services for the specialized needs
of a select group of customers while keeping its costs low.
Focus-Low-Cost Strategy: - Answer A generic business unit strategy in which a smaller
business keeps overall costs low while producing no-frills products or services for a market niche
with elastic demand.
Generic Strategies: - Answer Strategies that can be adopted by business units to guide their
organizations.
Intrapreneurship - Answer The creation of new business ventures within an existing firm.
low-Cost—Differentiation Strategy: - Answer A generic business unit strategy in which a
larger business unit maintains low costs while producing distinct products or services industry-
wide for a large market with a relatively inelastic demand.
Low-Cost Strategy: - Answer A generic business unit strategy in which a larger business
produces, at the lowest cost possible, no-frills products and services industry-wide for a large
market with a relatively elastic demand.
All Correct Answers 2026 Update.
acquisition - Answer A form of a merger whereby one firm purchases another, often with a
combination of cash and stock.
Backward Integration - Answer A firm's acquisition of its suppliers
BCG Growth-Share Matrix - Answer A corporate portfolio framework developed by the
Boston Consulting Group that categorizes a firm's business units by the market share that they
hold and the growth rate of their respective markets
Conglomerate (Unrelated) Diversification - Answer a form of diversification in which a firm
acquires a business to reduce cyclical fluctuations in cash flows or revenues
core competencies - Answer The firm's key capabilities and collective learning skills that are
fundamental to its strategy, performance, and long-term profitability
Corporate Profile: - Answer Identification of the industry or industries in which a firm
operates
Corporate-Level Strategy: - Answer The strategy that top management formulates for the
overall company
Divestment - Answer A corporate-level retrenchment strategy in which a firm sells one or
more of its business units.
External Growth - Answer A corporate-level growth strategy whereby a firm acquires other
companies.
Forward Integration: - Answer A firm's acquisition of one or more of its buyers
Growth Strategy: - Answer A corporate-level strategy designed to increase revenues, and
ultimately profits and/or market share
Horizontal Integration - Answer a form of acquisition in which a firm expands by acquiring
other companies in its same line of business.
,Horizontal Related Diversification - Answer A form of diversification in which a firm acquires a
business outside its present scope of operation but with similar or related core competencies
Internal Growth - Answer A corporate-level growth strategy in which a firm expands by
internally increasing its size and sales rather than by acquiring other companies
International Franchising - Answer A form of licensing in which a local franchisee pays a
franchiser in another country for the right to use the franchiser's brand names, promotions,
materials, and procedures.
International Licensing: - Answer An arrangement whereby a foreign licensee purchases the
rights to produce a company's products and/or use its technology in the licensee's country for a
negotiated fee structure.
Liquidation - Answer A corporate-level retrenchment strategy in which a firm terminates one
or more of its business units by the sale of their assets
Merger - Answer A corporate-level growth strategy in which a firm combines with another
firm through an exchange of stock.
Retrenchment Strategy - Answer A corporate-level strategy designed to reduce the size of the
firm
Stability Strategy - Answer A corporate-level strategy intended to maintain a firm's present
size and current lines of business
Strategic Alliances: - Answer A corporate-level growth strategy in which two or more firms
agree to share the costs, risks, and benefits associated with pursuing new business
opportunities. Strategic alliances are often referred to as partnerships
Synergy - Answer When the combination of two firms results in higher efficiency and
effectiveness than would otherwise be achieved by the two firms separately
Turnaround - Answer A corporate-level retrenchment strategy intended to transform the firm
into a leaner and more effective business by reducing costs and rethinking the firm's product
lines and target markets.
Vertical Integration - Answer A form of integration in which a firm expands by acquiring a
company in the distribution channel.
, Business Strategy: - Answer A strategy delineating how a business unit competes with its
rivals; also called competitive strategy.
Business Unit - Answer An organizational entity with its own unique mission, set of
competitors, and industry
Competitive Advantage: - Answer A state whereby a business unit's successful strategies
cannot be easily duplicated by its competitors.
Differentiation Strategy - Answer A generic business unit strategy in which a larger business
produces and markets to the entire industry products or services that can be readily
distinguished from those of its competitors.
First-Mover Advantages - Answer Benefits derived from being the first firm to offer a new or
modified product or service.
Focus-Differentiation Strategy - Answer A generic business unit strategy in which a smaller
business produces highly differentiated products or services for the specialized needs of a
market niche.
Focus—Low-Cost-Differentiation Strategy: - Answer A generic business unit strategy in which
a smaller business produces highly differentiated products or services for the specialized needs
of a select group of customers while keeping its costs low.
Focus-Low-Cost Strategy: - Answer A generic business unit strategy in which a smaller
business keeps overall costs low while producing no-frills products or services for a market niche
with elastic demand.
Generic Strategies: - Answer Strategies that can be adopted by business units to guide their
organizations.
Intrapreneurship - Answer The creation of new business ventures within an existing firm.
low-Cost—Differentiation Strategy: - Answer A generic business unit strategy in which a
larger business unit maintains low costs while producing distinct products or services industry-
wide for a large market with a relatively inelastic demand.
Low-Cost Strategy: - Answer A generic business unit strategy in which a larger business
produces, at the lowest cost possible, no-frills products and services industry-wide for a large
market with a relatively elastic demand.
