1. By purchasing La Boulange, Starbucks is implementing a ______________ in the hopes of gaining a competitive advantage.

a. industry-level strategy

b. corporate-level strategy

c. small business strategy

d. business-level strategy

2. By purchasing La Boulange and operating the bakery as Starbucks' sole supplier, Starbucks is able to control the value, quality and costs associated with its products. These value chain efforts to increase profitability are called:

a. Horizontal integration

b. Vertical integration

c. Tapered integration

d. Vertical disintegration

3. What form of vertical integration is Starbucks using in purchasing La Boulange?

a. Backward vertical integration

b. Horizontal integration

c. Forward vertical integration

d. Middle vertical integration

4. Starbucks' previous attempts to include food in its product offerings have met with mediocre results. Currently, only one-third of customers buy food products at Starbucks. How does using vertical integration increase Starbucks' financial risk by buying and operating its own bakery supplier?

a. Demand is predictable.

b. The bakery supplier will begin to take precedence over the development of its beverages.

c. Starbucks can establish market power in the bakery industry.

d. Demand is unpredictable.

5. By using vertical integration, Starbucks' main motive in introducing bakery products is to increase its:

a. Long-term profitability

b. Product offering

c. Product differentiation

d. Short-term profitability

6. Starbucks is implementing a corporate-level strategy to diversify its product offerings by purchasing La Boulange in the efforts to:

a. increase Starbucks' value to customers by improving its quality and overall performance in its industry.

b. increase Starbucks' value to customers and lower its cost structure.

c. maintain Starbucks' value to customers by continuing to offer bakery products.

d. decrease Starbucks' value to customers but improve its profitability through cost cutting.