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Because of Nintendos errors in strategy, they have fallen from number one to number three
in the video game industry.
Answer: True
2.
Page: 268
Type: F
Level: 1
Page: 269
Type: F
Level: 2
Page: 269
Type: F
Level: 3
Page: 269
Type: F
Level: 1
Page: 270
Type: F
Divestiture means selling of a business unit for the cash value of the assets, thus terminating
its existence.
Answer: False
9.
Level: 2
8.
Type: F
There are four categories of grand strategies: growth, stability, retrenchment and
diversification.
Answer: False
7.
Page: 268
6.
Level: 2
The general plan of major action by which an organization intends to achieve its long-term
goals is called business-level strategy.
Answer: False
5.
Type: F
Top mangers and chief executives have the final responsibility for strategic planning rests.
Answer: True
4.
Page: 267
Given the need for massive infusion of cash, only large multinationals are concerned with
strategy.
Answer: False
3.
Level: 2
Level: 1
Page: 271
Type: F
When K-Mart laid off thousands of people and closed over 100 stores, it was following a
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 212
retrenchment strategy.
Answer: True
10.
18.
Type: F
Level: 1
Page: 271
Type: F
Level: 2
Page: 272
Type: F
Level: 2
Page: 272
Type: F
Level: 1
Page: 273
Type: F
Level: 2
Page: 274
Type: F
Just-for-You, Inc.'s ability to market its products better than its competitors is an example of
its core competence.
Answer: True
Level: 2
Page: 274
Type: A
The interaction of Production and Sales working together to produce profit greater than the
total of both working separately is an example of synergy.
Answer: True
19.
Page: 271
The essence of formulating strategy is choosing how the organization will be identical to its
key competitors in the industry.
Answer: False
17.
Level: 2
A transnational strategy seeks to achieve both global integration and national responsiveness.
Answer: True
16.
Type: A
15.
Page: 271
14.
Level: 2
13.
Type: A
12.
Page: 271
Tools 4 All, a department store, sold all of its inventories at 80 percent off and permanently
closed its doors. This is referred to as liquidation.
Answer: True
11.
Level: 3
level: 3
Page: 275
Type: A
Value refers to the combination of benefits received and costs paid by the customer.
Answer: True
Level: 1
Page: 275
Type: F
20.
21.
Level: 2
Page: 276
Type: F
Level: 1
Page: 278
Type: F
Level: 2
Page: 278
Type: F
Level: 2
Page: 278
Type: F
Level: 1
Page: 278
Type: F
Level: 3
Page: 279
Type: A
Threats are characteristics of the internal environment that may prevent the organization from
achieving its strategic goals.
Answer: False
30.
Type: F
For General Electric, a strong financial base, combined with an excellent reputation with
creditors and the equity market, is with a significant strength to include in its SWOT analysis.
Answer: True
29.
Page: 276
28.
Level: 2
27.
Type: F
26.
Page: 275
Strategy implementation involves the planning and decision making that lead to the
establishment of the firms goals.
Answer: False
25.
Level: 1
Strategic decisions at the business level concern amount of advertising, direction and extent
of R & D, product changes, new product development, equipment and facilities, and
expansion or contraction of product lines.
Answer: True
24.
Type: F
23.
Page: 275
22.
Level: 2
Level: 2
Page: 279
Type: F
Portfolio strategy pertains to the mix of business units and product lines that fit together in a
logical way to provide synergy and competitive advantage for the corporation.
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 214
Answer: True
31.
Level: 2
Page: 282
Type: F
Level: 1
Page: 283
Type: F
Level: 1
Page: 283
Type: F
Level: 2
Page: 285
Type: F
Level: 1
Page: 287
Type: F
Level: 2
Page: 289
Type: F
40.
Type: F
39.
Page: 282
38.
Level: 1
Differentiation, cost leadership, and focus are three of Porter's competitive strategies.
Answer: True
37.
Type: F
The bargaining power of the government, according to Porter, is one of the five competitive
forces affecting an organization's competitive environment.
Answer: False
36.
Page: 281
35.
Level: 1
In BCG Matrix, the circle size represents the relative profit made by each business in the
companys portfolio.
Answer: False
34.
Type: F
According to the BCG Matrix, the question mark exists in a new, rapidly growing industry
but has only a small market share.
Answer: True
33.
Page: 280
The BCG (Boston Consulting Group) matrix evaluates SBUs with respect to their business
growth rate and geographical location.
Answer: False
32.
Level: 1
Level: 1
Page: 293
Type: F
Level: 2
Page: 296
Type: F
The set of decisions and actions used to formulate and implement strategies that will provide
a competitively superior fit between the organization and its environment so as to achieve
organizational goals is known as
a.
b.
c.
d.
e.
strategy formulation.
strategic planning.
strategic management.
strategy implementation.
strategy evaluation.
Answer: c
2.
Level: 1
Answer: b
Level: 1
Page: 269
Type: F
Dobson Corporation is continually seeking out new markets and products, and is always on
the lookout for acquisition candidates. Dobson is pursuing a grand strategy of
a.
b.
c.
d.
e.
stability.
retrenchment.
growth.
liquidation.
divestiture.
Answer: c
4.
Type: F
Which of these refers to the overall plan of action for the organization?
a.
b.
c.
d.
e.
3.
Page: 268
Level: 2
Page: 269
Type: A
The acquisition of businesses that are related to current product lines or that takes the
corporation into new areas is referred to as
a.
b.
c.
d.
e.
retrenchment.
diversification.
liquidation.
cash cow.
internal growth.
Answer: b
Level: 2
Page: 269
Type: F
5.
stability.
retrenchment.
internal growth.
external growth.
divestiture.
Answer: d
6.
Level: 2
stability.
retrenchment.
internal growth.
external growth.
cash cow.
Answer: c
Level: 2
Type: A
growth.
stability.
divestiture.
liquidation.
external growth.
Answer: b
Level: 2
Page: 270
Type: A
When the organization goes through a period of forced decline by either shrinking current
business units or selling off or liquidating entire businesses, it is called
a.
b.
c.
d.
e.
retrenchment.
growth.
cash cow.
multidomestic.
stability.
Answer: a
9.
Page: 269
The management of Mugs, Inc. decided on growing slowly and in a controlled fashion. This
is consistent with the grand strategy of
a.
b.
c.
d.
e.
8.
Type: F
Toy Trains, Inc. just introduced a new line of trains. This action is consistent with the grand
strategy of
a.
b.
c.
d.
e.
7.
Page: 269
Level: 1
Page: 270
Type: F
d.
e.
Answer: c
10.
Level: 3
Diversification
Transnational strategy
Synergy
Divestiture
Liquidation
Answer: e
Level: 1
Level: 1
Divestiture is a type of a
a.
b.
c.
d.
e.
Page: 271
Type: F
strategy.
growth
global
retrenchment
stability
diversification
Answer: c
Level: 1
Page: 271
Type: F
If ABC International has standardized its product line throughout the world it is pursuing a
a.
b.
c.
d.
e.
multidomestic strategy.
retrenchment strategy.
diversity strategy.
globalization strategy.
liquidation strategy.
Answer: d
14.
Type: F
Diversification
Transnational strategy
Synergy
Divestiture
Liquidation
Answer: d
13.
Page: 271
Which of these involves the selling off of businesses that no longer seem central to the
corporation?
a.
b.
c.
d.
e.
12.
Type: A
means selling off a business unit for the cash value of the assets, thus
terminating its existence.
a.
b.
c.
d.
e.
11.
Page: 271
Level: 2
Page: 271
Type: A
a.
b.
c.
d.
e.
globalization strategy.
multidomestic strategy.
diversity strategy.
domestic strategy.
liquidation strategy.
Answer: a
15.
Level: 1
Page: 272
Type: F
A strategy that combines global coordination to attain efficiency with flexibility to meet
specific needs in various countries is referred to as a
a.
b.
c.
d.
e.
domestic strategy.
global strategy.
transnational strategy.
multidomestic strategy.
region design strategy.
Answer: c
Level: 1
Page: 273
Type: F
The plan of action that prescribes resource allocation and other activities for dealing with the
environment and helping the organization attain its goals is known as a(n)
a.
b.
c.
d.
e.
goal.
objective.
mission.
vision.
strategy.
Answer: e
18.
Type: F
Domestic strategy
Global strategy
Transnational strategy
Multidomestic strategy
Market design strategy
Answer: d
17.
Page: 271
Which of these refers to the modification of product design and advertising strategies to suit
the specific needs of individual countries?
a.
b.
c.
d.
e.
16.
Level: 2
Level: 2
Page: 273
Type: F
A ______ is a business activity that an organization does especially well relative to its
competition is known as
a.
b.
c.
strategy
synergy
cash cow
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 219
d.
e.
core competence
multidomestic
Answer: d
19.
Page: 275
Type: F
functional-level strategy.
internal growth strategy.
multi-domestic strategy.
corporate-level strategy.
business-level strategy.
Answer: d
Level: 3
Page: 275
Type: A
Which of these can be defined as the combination of benefits received and costs paid by the
customer?
a.
b.
c.
d.
e.
Organizational benefits
Value
Cost-benefit diversity
Synergy
Core competence
Answer: b
Level: 1
Page: 275
Type: F
When Philip-Morris, the tobacco giant, bought Kraft, Inc., it was pursuing a
a.
b.
c.
d.
e.
corporate-level strategy.
business-level strategy.
functional-level strategy.
multidomestic strategy.
retrenchment strategy.
Answer: a
23.
Level: 1
When AT&T decided to buy Media One, a cable company, it was pursuing a
a.
b.
c.
d.
e.
22.
Type: F
core competence.
synergy.
value creation.
business-level strategy.
multidomestic strategy.
Answer: b
21.
Page: 274
The condition that exists when the organization's parts interact to produce a joint effect that
is greater than the sum of the parts acting alone is known as
a.
b.
c.
d.
e.
20.
Level: 1
Level: 2
Page: 275
Type: A
a.
b.
c.
d.
e.
Business-level strategy
Functional-level strategy
Corporate-level strategy
Operational-level strategy
Competitive-level strategy
Answer: c
24.
Level: 2
Page: 275
Type: A
Answer: a
Level: 2
Page: 275
Type: F
functional-level strategy.
multi-domestic strategy.
corporate-level strategy.
retrenchment strategy.
business-level strategy.
Answer: e
27.
Type: F
corporate-level strategy.
business-level strategy.
functional-level strategy.
growth strategy.
stability strategy.
Answer: a
26.
Page: 275
Sears' decision to sell off much of its financial services division is an example of a
a.
b.
c.
d.
e.
25.
Level: 1
Level: 3
Page: 276
Type: A
Answer: b
Level: 2
Page: 276
Type: A
28.
Decisions regarding the proper amount of advertising for a particular good or service are
related to
a.
b.
c.
d.
e.
corporate-level strategies.
functional-level strategies.
tactical-level strategies.
business-level strategies.
retrenchment strategies.
Answer: d
29.
Level: 2
Page: 276
Type: F
Answer: c
Level: 1
Page: 277
Type: F
30.
Which of these refers to the use of managerial tools to direct resources toward the
achievement of strategic goals?
a.
b.
c.
d.
e.
Strategy formulation
Strategy coordination
Strategy implementation
Strategy control
Strategy planning
Answer: c
31.
Page: 278
Type: F
The planning and decision making that lead to the establishment of the organization's goals
and of a specific strategic plan is known as
a.
b.
c.
d.
e.
strategy formulation.
strategy implementation.
strategy coordination.
strategy control.
SWOT.
Answer: a
32.
Level: 2
Level: 2
Page: 278
Type: F
Which of these typically includes a search for SWOT that affect organizational performance?
a.
b.
c.
d.
e.
Answer: c
33.
Level: 2
Page: 278
Type: A
Answer: e
Level: 2
Page: 278
Type: F
Plum Plastics has extremely creative employees who, in the opinion of the organization, keep
the company ahead of the competition. The creativity of these employees would be classified
as
a.
b.
c.
d.
e.
an internal weakness.
an external opportunity.
an external strength.
an internal strength.
a neutral factor.
Answer: d
36.
Type: F
Answer: b
35.
Page: 278
Barney has been assigned to conduct a situation analysis for his organization, Lets Share,
Inc. As part of this assignment, Barney will
a.
b.
c.
d.
e.
34.
Level: 2
Level: 2
Page: 279
Type: A
Where does the information about opportunities and threats comes from?
a.
b.
c.
d.
e.
Answer: c
37.
Level: 2
an external opportunity.
an internal strength.
an external threat.
an external weakness.
a congressional chaos.
Answer: c
Type: A
Level: 2
Page: 280
Type: F
How business units and product lines fit together in a logical way is the essence of
a.
b.
c.
d.
e.
business-level strategy.
portfolio strategy.
competitive strategy.
financial strategy.
functional strategy.
Answer: b
Level: 2
Page: 280
Type: F
Answer: c
41.
Page: 280
Marketing
Finance
Management
Production
R&D
Answer: e
40.
Level: 2
According to your text, which of the following is a particular strength of Kraft Foods?
a.
b.
c.
d.
e.
39.
Type: F
Drain Well, Inc. is particularly concerned about pending legislation in Congress that would
further regulate their organization. This legislation would be classified as
a.
b.
c.
d.
e.
38.
Page: 279
Level: 2
Page: 281
Type: F
Click Once, Inc. has a number of strategic business units. Their hand-held computer unit has
a large market share in this rapidly growing industry. Their hand-held computer business
would be classified as
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 224
a.
b.
c.
d.
e.
a dog.
a star.
a question mark.
a cash cow.
stuck in the middle.
Answer: b
42.
Level: 2
Page: 282
Type: F
Answer: a
Level: 2
Page: 282
Type: F
Which of the following portfolio categories is made up of poor performers who command
only a small share of a slow growth market?
a.
b.
c.
d.
e.
Star
Cash cow
Question mark
Dog
Cat
Answer: d
45.
Type: A
Answer: d
The star has a
a.
b.
c.
d.
e.
44.
Page: 281
43.
Level: 2
Level: 1
Page: 282
Type: F
Answer: c
Level: 2
Page: 282
Type: F
46.
Answer: d
47.
Level: 2
Level: 2
Page: 282
Type: F
Answer: b
Level: 2
Page: 283
Type: F
differentiation.
bargaining power of buyers.
bargaining power of suppliers.
threat of substitute products.
potential new entrants.
Answer: a
50.
dogs
question marks
stars
cash cows
none of the above
Answer: b
59.
Type: F
48.
Page: 282
Level: 2
Page: 283
Type: F
The
strategy involves an attempt to distinguish the firm's products or services from
others in the industry.
a.
b.
c.
d.
cost leadership
differentiation
focus
internal growth
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 226
e.
liquidation
Answer: b
51.
Level: 2
Focus
Globalization
Overall cost leadership
Differentiation
Liquidation
Answer: d
Level: 2
Type: F
Cost leadership
Differentiation
Focus
Internal growth
Liquidation
Answer: a
Level: 2
Page: 286
Type: F
Answer: a
54.
Page: 285
Which strategy involves seeking efficient facilities, cutting costs and using tight cost controls
to be more efficient than competitors?
a.
b.
c.
d.
e.
53.
Type: F
Which strategy can be profitable for an organization when customers are loyal and willing to
pay high prices?
a.
b.
c.
d.
e.
52.
Page: 285
With a
group.
a.
b.
c.
d.
e.
Level: 2
Page: 286
Type: A
Answer: c
55.
Page: 287
Type: A
acquisitions.
joint ventures.
strategic business partnering.
mergers.
preferred supplier arrangements.
Answer: b
Level: 1
Page: 289
Type: F
When DuPont and Xerox cooperated to create a separate entity called DX Imaging, Inc., it
implemented which of these cooperative strategies?
a.
b.
c.
d.
e.
Acquisitions
Joint ventures
Strategic business partnering
Mergers
Preferred supplier arrangements
Answer: b
Level: 3
Page: 289
Type: A
Cotton Creations is expecting to introduce new products that will experience rapid growth.
Which of the following functional-level strategies should they ignore?
a.
b.
c.
d.
e.
Test marketing
Consumer product trials
Cost reduction
Advertising campaigns
All of the above should be ignored.
Answer: c
59.
Level: 2
Separate entities created with two or more active firms as sponsors are called
a.
b.
c.
d.
e.
58.
Type: F
focus
differentiation
overall cost leadership
multidomestic
universal strategy
Answer: a
57.
Page: 287
Mingles, Inc. concentrates its efforts on its target market of 18 to 25 year olds. It is using a
strategy.
a.
b.
c.
d.
e.
56.
Level: 2
Level: 3
Page: 290
Type: A
a.
b.
c.
d.
e.
SWOT analysis
strategic formation
strategic implementation
strategic analysis
strategy evaluation
Answer: c
60.
Level: 1
Page: 292
Type: F
Leadership
Structural design
Human resources
Information systems
Control systems
Answer: b
Level: 3
Page: 293
Type: A
To encourage employees to find ways to cut costs, and thus achieve their strategic goal of
overall cost leadership, Delta Dreamforce introduced a pay-for-performance system. This is
an example of which of the dimensions used for implementing strategy?
a.
b.
c.
d.
e.
Answer: a
63.
Type: F
Leadership
Structural design
Human resources
Information and control systems
Compensation
Answer: a
62.
Page: 291
Persuasion, motivation, and changes in cultures and values are examples of which of the
dimensions used to implement strategy?
a.
b.
c.
d.
e.
61.
Level: 2
The
a.
b.
Level: 2
Page: 293
of implementing a strategy is
Type: A
when a company goes global.
cost, less
difficulty, lessened
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 229
c.
d.
e.
difficulty, increased
ease, increased
success, increased
Answer: c
Level: 2
Page: 294
Type: F
Scenario Questions
ScenarioDarla Davidson
Darla Davidson was an executive with Digital Industries, a leading manufacturer of color televisions.
She recognized that the color television market in the late 1970's was facing significant challenges.
After two decades of highly successful development and marketing, the sales of color televisions had
slowed and replacing older color television sets largely created her market.
1.
Using the logic of the BCG grid, Darla should recognize that her strategic business unit was
in which quadrant?
a.
b.
c.
d.
e.
Star
Cash Cow
Question Mark
Dog
None of the above
Answer: b
2.
The strategy that the BCG matrix suggests that Darla should take for this SBU is
a.
b.
c.
d.
e.
3.
Type: A
Answer: d
Type: A
Which one of the following is not one of the competitive forces that Porter recommends that
Darla should recognize?
a.
b.
c.
d.
e.
Answer: e
Type: A
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 230
ScenarioQT.com
Faced with rapidly growing business, Quick Trade, Inc., a global brokerage company with the largest
market share, recently announced that they have established an on-line stock investment and trading
subsidiary, QT.com, where investors can trade stocks at the lowest rates in the industry. The .com
subsidiary has less than one percent market share but it faces a very high business growth rate. In the
brokerage industry the competition is fierce and all players are cutting their on-line commission rates.
1.
cash cow.
dog.
star.
question mark.
stuck in the middle business.
Answer: c
2.
Type: A
3.
Type: A
If Quick Trades traditional brokerage business were to face a declining business growth, it
may need to be reclassified as a
a.
b.
c.
d.
e.
cash cow.
dog.
star.
question mark.
dead business.
Answer: a
4.
Type: A
Quick Trade is following which strategy, according to Porter, through the .com subsidiary?
a.
b.
c.
d.
e.
Stability
Cost leadership
Focus
Differentiation
Retrenchment
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 231
Answer: b
Type: A
Short-Answer Questions
1.
is the set of decisions and actions used to formulate and implement strategies that
will provide a competitively superior fit between the organization and its environment so
as to achieve organizational goals.
Answer: Strategic management
2.
A(n) _______ is the general plan of major action by which an organization intends to
achieve its long-term goals.
Answer: grand strategy
3.
Page: 269
The acquisition of business that are related to current product lines or that take the
corporation into new areas is called ______.
Answer: diversification
5.
Page: 270
Terminating the existence of a business unit by selling it off for the cash value of its assets
is known as _______.
Answer: liquidation
8.
Page: 270
______ means that the organization goes through a period of forced decline by either
shrinking current business units or selling of or liquidating entire businesses.
Answer: Retrenchment
7.
Page: 269
6.
Page: 269
4.
Page: 268
Page: 271
The standardization of product design and advertising strategies throughout the world is
called
.
Answer: globalization
Page: 271
9.
10.
When an organization chooses a(n) _______ strategy, it means that business decisions
such as product design are made on a country-by-country basis.
Answer: multidomestic
11.
A
strategy seeks to achieve both global integration and national
responsiveness.
Answer: transnational
12.
Page: 273
A business activity that an organization does particularly well relative to its competition is
known as a(n) _______.
Answer: core competence
14.
Page: 275
16.
strategy.
Page: 277
18.
strategy.
Page: 275
17.
Page: 274
When organizational parts interact to produce a joint effect that is greater than the sum of
the parts acting alone,
occurs.
Answer: synergy
15.
Page: 272
The plan of action that prescribes resource allocation and other activities for dealing with
the environment and helping the organization attain its goals is called a
.
Answer: strategy
13.
Page: 272
Page 277
includes the planning and decision making that lead to the establishment of
the firm's goals and the development of a specific strategic plan.
Answer: Strategy formulation
Page: 278
19.
The use of managerial and organizational tools to direct resources toward accomplishing
strategic results is known as _______.
Answer: strategy implementation
20.
Page: 278
21.
22.
In the BCG matrix, the star has a _______ market share in a rapidly growing industry.
Answer: large
23.
Page: 281
In the BCG matrix, the dog has ______ market share and ______ business growth rate.
Answer: low, low
24.
Page: 280
Page: 281
25.
The
strategy involves an attempt to distinguish the firm's products or services
from others in the industry.
Answer: differentiation
26.
With a
strategy, the organization aggressively seeks efficient facilities, pursues
cost reductions, and uses tight cost controls to produce products more efficiently than
competitors.
Answer: cost leadership
27.
Page: 285
With a
buyer group.
Page: 286
Answer: focus
28.
Page: 287
______ strategies are when companies join with other organizations to promote
innovation, expand markets, and pursue joint goals.
Answer: Partnership Page: 288
29.
The ______ is driving and supporting the move toward partnership thinking.
Answer: Internet
30.
Page: 288
31.
______ involves regularly making difficult decisions about doing things in a way that
supports rather than undermines the organizations chosen strategy.
Answer: Implementation
32.
Page: 291
The ability to influence people to adopt the new behaviors needed for strategy
implementation is called ______.
Answer: leadership
33.
Page: 289
Page: 292
Reward systems, pay incentives, budgets for allocating resources, information technology
systems, and organizations rules, policies, and procedures are included in ______.
Answer: information and control systems
Page: 293
Essay Questions
1.
Level: 2
2.
Page: 269-270
3.
Page: 271-273
4.
Page: 275-277
In order for companies to remain competitive, their strategies must focus on three things.
Describe these three focuses.
ANSWER:
The three focuses are core competences, synergy, and value creation. Core competence is
something the organization does very well in comparison to its competitors. A core
Chapter Eight * Strategy Formulation and Implementation
Test Bank * Page 236
Page: 273-275
6.
Page: 278
Briefly describe the Boston Consulting Group matrix, including its dimensions, quadrants,
and strategic recommendations.
ANSWER:
The two dimensions of the matrix are business growth rate and market share. When
growth is high and share is high, the SBU has the best situation and is called a star. When
growth is low and share is high, the SBU is known as a cash cow. When growth is high
but share is low, the SBU is a question mark. In the fourth quadrant, growth and share are
both low. This is the worst situation, and the SBU is a dog. The strategic
recommendations are: (1) invest in stars; (2) milk the cash cow; (3) invest in question
marks to create stars or divest the question marks; and (4) divest the dogs.
Level: 3
7.
Page: 281-282
facilities, cutting costs, or maintaining tight cost control. When a company uses a
differentiation or a cost leadership strategy in a particular market or buyer group, they are
employing a focus strategy. This strategy allows the organization to concentrate on a
narrow market niche.
Level: 2
8.
Page: 285-287
Briefly describe the different cooperative strategies using the continuum of cooperative
strategies.
ANSWER:
Please refer to exhibit 8-8 in the text. The different cooperative strategies are preferred
supplier arrangements, strategic business partnering, joint venture, mergers, and
acquisitions.
Level: 2
9.
Pages: 289
10.
Page: 294