Applying the Concept Answers
Applying the Concept 5-1: Objectives
For each objective, state which “must” criterion is not met.
A. single result
D. target date
1. To sell 5% more hot dogs and 8% more soda at the game on January 15, 2017
A. Single result. The objective should contain only one product.
2. To increase sales in 2017
B. Specific. Sales are measured in the income statement, so the missing criteria is “By how much do you want to increase sales by--$1, $100, $1,000?
3. To be perceived as the best restaurant in the Valley by the end of 2017
C. Measurable. How will you know if you are perceived as the best?
4. To write objectives next week
D. Target date. It is more effective to set a specific date than to give a time span.
5. To double profits in China
D. Target date. By when will the objective be met?
Applying the Concept 5-2: Growth Strategies
Identify the type of growth strategy described by each statement.
B. related diversification
C. forward integration
D. unrelated diversification
E. backward integration
6. S. A. Diamond Mines starts to cut its stones into diamond shapes for jewelry.
C. Forward integration. This is a raw material company going forward to manufacturing by cutting the stones to be sold to retail jewelry stores.
7. Kentucky Fried Chicken (KFC) opens one of its fast-food restaurants in Vietnam.
A. Concentration. Opening another KFC is staying in the same line of business.
8. Uber taxi acquires a small upscale restaurant in New York.
D. Unrelated diversification. Taxi rides and restaurants are not related products.
9. Boeing buys the small Shaw Custom Jets company.
B. Related diversification. A large air craft maker buying a smaller size plane company is related.
10. 7 Up soda buys lemon and lime groves.
E. Backwards integration. 7Up is a manufacturer going backwards to supply its own lemon and limes to flavor its soda.
11. Lenovo, a computer manufacturer, starts making printers.
B. Related diversification. Computers and printers are related product lines often sold together.
12. Lowe’s buys a tool manufacturer to make its own brand-name tools.
E. Backward integration. This is going from retail back to manufacturing.
13. LinkedIn buys the Quality Inn hotel chain.
D. Unrelated diversification. WD-40 and Duracell Battery are very different lines of businesses.
14. Verizon opens a new retail store in a mall.
A. Concentration. This is growth within the same line of business.
15. Tesla starts opening its own dealerships to sell its cars.
C. Forward integration. This is going from manufacturing to retailing.
Applying the Concept 5-3: Adaptive Strategies
Identify the type of strategy represented in each statement.
16. Taco Bell goes international by opening restaurants in China.
A. Prospecting. Going to new markets is aggressive growth.
17. HP pioneers a laptop-powered computer that can be folded up and put in your pocket.
A. Prospecting. As pioneers, HP would be prospecting.
18. Domino’s used this strategy after Pizza Hut started to copy delivering pizza.
B. Defending. Domino’s Pizza tried to keep its customers.
19. This is the primary strategy of industry leader P&G in the saturated U.S. personal and family care products market.
B. Defending. P&G tried to keep its customers.
20. When McDonald’s came out with a new Angus Burger to compete with Burger King’s successful Angus Burgers, it was using this strategy.
C. Analyzing. McDonald’s is following the lead of Burger King, who was probably the prospector.
Applying the Concept 5-4: Identifying Plans
Identify the type of plan exemplified by each statement.
21. At Ford, “Quality is job one.”
A. Policy. This is a general statement. No information is given on how to do a quality job.
22. President Barack Obama’s Affordable Care Act.
D. Program. This was a set of activities intended to accomplish an objective over a specified number of years.
23. How much do you need to run your department next year?
E. Budget. The statement requests a budget.
24. A protective coat must be worn in the lab.
C. Rule. It tells you specifically what to do.
25. Forms for maternity or parental leave must be filled out, approved, and signed by the supervisor, and submitted to the HR office one month in advance of the planned leave.
B. Procedure. It tells you how to proceed: (1) fill out the form, (2) have it approved and signed by the manager, and (3) submit it to the personnel office one month in advance of the effective date.