Question

1. What is the difference between forward integration and backward integration?

a. Backward integration involves distribution and sale; forward integration involves raw material production.

b. Both involve adding value after a product is manufactured.

c. Forward integration involves distribution and sale; backward integration involves raw material production.

d. Backward integration involves stripping value at each stage; forward integration adds value at each stage of the chain.

2. A fitness activity tracker company has the largest market share out of its competitors. One of the company's biggest competencies is figuring out how to deliver the most accurate data based on the way it programs the trackers to read the movement of those wearing them. Researchers have discovered a breakthrough in how to apply the technology to pets. Another company has already released an activity tracker for house cats. The company wants to release a line for both dogs and cats at a higher price point than its competitor. The company differentiates its new product in the trackers' ability to decipher the moods of the pet based on its heart rate. It believes consumers are willing to pay the extra amount because pet lovers are always trying to figure out the moods of their pets anyway. Through this new release, how will the company be implementing a corporate-level strategy that will lead to an increase in its competitive advantage?

a.The pet tracker has increased differentiation from its competitor, and its price point will lead to increased profitability.

b. The pet tracker has increased differentiation from its competitor, even though its price point will not likely lead to increased profitability.

c. The pet tracker has decreased differentiation from its competitor, but its price point will lead to increased profitability.

d. The pet tracker has decreased differentiation and a lower price point than its competitor.

3. A cell phone company has decided to have an independent human resources company perform its human resources functions. This arrangement is cheaper for the cell phone company and alleviates the need to build up its own human resources department. The cell phone company is participating in:

a.strategic alliance.

b. strategic outsourcing.

c. short-term contracting.

d. long-term contracting.

4. The principal goal of corporate-level strategy is to enable a company to:

a.promote its competitive disadvantage and profitability in its present business.

b. keep a company from promoting its competitive advantage and profitability in its present business.

c. promote its competitive advantage and profitability in only its future business.

d. promote its competitive advantage and profitability in its present business.

5. Staying within one industry through horizontal integration enables a company to allocate which resources and capabilities to compete in one area?

a.Backward in the value chain

b. Core and specialized suppliers not owned by the company

c. Managerial, financial, technological

d. Specialized assets, customers, and suppliers

6. An American car maker and a Japanese car maker have entered into a strategic alliance. Both have valuable technology that they need in order to perform their aspect of the manufacturing process for particular lines of vehicles. Since both need each other's technology, it is unlikely the other will use the proprietary information about the other to take advantage for fear of their own technology becoming disclosed. To guarantee that each partner maintains the agreement, the two companies are participating in:

a.parallel sourcing policy.

b. hostage taking.

c. quasi integration.

d. credible commitment

Answer 1

1. c. Forward integration involves distribution and sale; backward integration involves raw material production.

In a forward integration a company tries to acquire / merge with distributors and retailers whereas in backword integration they try to acquire / merge with supplier

2. a.The pet tracker has increased differentiation from its competitor, and its price point will lead to increased profitability.

The company is trying to differentiate itself from its competitor by positioning its product to have ability to decipher the moods of the pet based on its heart rate. Increased price point will lead to increased profit.

3. b. strategic outsourcing.

Strategic outsourcing refers to hiring a 3rd party to perform the service which was traditionally handled by the company primarily for cost-cutting, in this case - HR function.

4. d. promote its competitive advantage and profitability in its present business.

The first two options are wrong because they indicate negative intent of the company by saying "promoting competetive disadvantage" and "keep a company from promoting its competetive advange". The 3rd option only talks about profitability of the future and is hence incorrect. Option D is correct since it talks about promoting the competetive advantage the company have over competitors and the profitability of its current business.