Practice Quiz

FSOT Full Test Bank - Question List

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26. When should a company consider vertical integration?
  1. When lowered transactional costs and greater coordination are important
  2. Whenever different, specialized companies will be combined
  3. When the company is unable to expand profits within its segment of the value chain
  4. When the company lacks liquidity
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27. What is it called when the head office closely advises subsidiaries?
  1. Mentoring
  2. Parenting
  3. Consolidating
  4. Centralizing
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28. Which of the following is unwise in a strategic alliance?
  1. Setting clear expectations between members of the alliance
  2. Making sure all partners are treated fairly
  3. Maintaining open communication with strategic partners
  4. Relying on governing documents to make the venture work smoothly
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29. Companies aim to earn more than “normal profits.” What are normal profits?
  1. The cost of doing business plus a bit more
  2. An equal return on investment for an investment with equal risk
  3. Whatever profit the company made during last year, plus inflation
  4. Normal profits depend on the industry.
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30. Which of the following is a characteristic of a mature market?
  1. Growth is low, and competition is intense.
  2. Growth is high, and it is an easy market to enter.
  3. Growth is low, but there is plenty of room for future expansion.
  4. Profit depends more on product design than on efficiency.
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