Question 1

Diversification may dissipate value if it is wrongly based on:

Accepted Answer

A) realizing economies of scope. 
B) rescuing core business. 
C) transferring competencies. 
D) acquisitions and restructuring. 
E) leveraging existing competencies. 
A) realizing economies of scope. 
B) rescuing core business. 
C) transferring competencies. 
D) acquisitions and restructuring. 
E) leveraging existing competencies. B

Question 2

In 2007,Google bought YouTube.This is an example of which of the following?

Accepted Answer

A) Partnership 
B) Strategic alliance 
C) Joint venture 
D) Acquisition 
E) Merger 
A) Partnership 
B) Strategic alliance 
C) Joint venture 
D) Acquisition 
E) Merger D

Question 3

A laundromat and a pool hall together invest in a new store,where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?

Accepted Answer

A) Steady industry conditions 
B) Varying firm-specific conditions 
C) Diversification for pooling risks 
D) Decreasing bureaucratic costs 
E) Greater differentiation of products 
A) Steady industry conditions 
B) Varying firm-specific conditions 
C) Diversification for pooling risks 
D) Decreasing bureaucratic costs 
E) Greater differentiation of products

Question 5

Which of the following seems to be a major determinant of a new venture's success?

Accepted Answer

A) Large-scale entry into the target industry is designed to build market share, even when entry involves significant short-term losses 
B) Cautious small-scale entry into the target industry is used so that the company can assess the probable outcome of the venture without losing too much money 
C) A low level of integration between the marketing and the research and development functions of the venturing company 
D) Supporting many new venture projects in the hope that one will succeed 
E) Killing the new venture if it does not show a profit after the end of the third year 
A) Large-scale entry into the target industry is designed to build market share, even when entry involves significant short-term losses 
B) Cautious small-scale entry into the target industry is used so that the company can assess the probable outcome of the venture without losing too much money 
C) A low level of integration between the marketing and the research and development functions of the venturing company 
D) Supporting many new venture projects in the hope that one will succeed 
E) Killing the new venture if it does not show a profit after the end of the third year

Question 6

An advantage of a joint venture is that it allows a company to quickly gain entry into a new industry where barriers are high.

Accepted Answer

A) True 
 B)False

Question 7

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Accepted Answer

A) Joint ventures 
B) New ventures 
C) Acquisitions 
D) Long-term contracting 
E) Taper integration 
A) Joint ventures 
B) New ventures 
C) Acquisitions 
D) Long-term contracting 
E) Taper integration

Question 8

Which of the following is not necessary for a successful acquisition?

Accepted Answer

A) A good bidding strategy 
B) A clear strategic rationale for making the acquisition 
C) Quick completion of the acquisition 
D) Thorough pre-acquisition screening 
E) Post-acquisition audit to review the process and discuss ways to improve it 
A) A good bidding strategy 
B) A clear strategic rationale for making the acquisition 
C) Quick completion of the acquisition 
D) Thorough pre-acquisition screening 
E) Post-acquisition audit to review the process and discuss ways to improve it

Question 9

Internal new ventures can generally be executed far more quickly than acquisitions.

Accepted Answer

A) True 
 B)False

Question 10

Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry.

Accepted Answer

A) True 
 B)False

Question 11

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

Accepted Answer

A) True 
 B)False

Question 12

Research suggests that small-scale entry into a new business is the best way for an internal venture to succeed.

Accepted Answer

A) True 
 B)False

Question 13

When one or more components of a company's value chain are applicable to a wide variety of industrial and commercial situations,which of the following strategies should a company pursue?

Accepted Answer

A) Unrelated diversification 
B) Related diversification 
C) A focus strategy 
D) Taper integration 
E) Backward integration 
A) Unrelated diversification 
B) Related diversification 
C) A focus strategy 
D) Taper integration 
E) Backward integration

Question 14

What is perhaps the most important reason why acquisitions fail?

Accepted Answer

A) The expense of the acquisition 
B) The timing of the acquisition 
C) Management's unwillingness to make the necessary effort to make the acquisition work effectively 
D) Incompetence on the part of workers in the acquired firm 
E) Difficulties in coordinating manufacturing activities 
A) The expense of the acquisition 
B) The timing of the acquisition 
C) Management's unwillingness to make the necessary effort to make the acquisition work effectively 
D) Incompetence on the part of workers in the acquired firm 
E) Difficulties in coordinating manufacturing activities

Question 15

The coordination required to realize value from a diversification strategy based on transferring,sharing,or leveraging competencies is a major source of bureaucratic costs.

Accepted Answer

A) True 
 B)False

Question 16

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because it can more effectively pool,share,and utilize resources or capabilities.

Accepted Answer

A) True 
 B)False

Question 17

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create:

Accepted Answer

A) a new business unit in the same industry. 
B) a new business unit in a different industry. 
C) lower costs in various business units. 
D) differentiation in various business units. 
E) new customers in the same industry. 
A) a new business unit in the same industry. 
B) a new business unit in a different industry. 
C) lower costs in various business units. 
D) differentiation in various business units. 
E) new customers in the same industry.

Question 18

Free cash flow is defined as:

Accepted Answer

A) money in a company's bank account. 
B) government funds given to a company for meeting Environmental Protection Agency (EP
A)  regulations. 
C) additional funds donated by stockholders. 
D) cash in excess of that required to fund investments in the company's industry and to meet any debt commitments. 
E) cash borrowed by the company that requires no interest payments. 
A) money in a company's bank account. 
B) government funds given to a company for meeting Environmental Protection Agency (EP
A)  regulations. 
C) additional funds donated by stockholders. 
D) cash in excess of that required to fund investments in the company's industry and to meet any debt commitments. 
E) cash borrowed by the company that requires no interest payments.

Question 19

Which of the following is the probable consequence of a company's inability to integrate two divergent corporate cultures after an acquisition?

Accepted Answer

A) Low management turnover 
B) Poor commercialization of the product 
C) An inability to realize potential gains from synergies 
D) The stock of highly diversified companies is valued lower 
E) Risks are shared by all 
A) Low management turnover 
B) Poor commercialization of the product 
C) An inability to realize potential gains from synergies 
D) The stock of highly diversified companies is valued lower 
E) Risks are shared by all

Question 20

Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?

Accepted Answer

A) The company has to achieve coordination between business units. 
B) The company has narrow organizational competencies. 
C) The company has superior strategic management and organizational design. 
D) The company has no bureaucratic costs that arise from the number of businesses in its portfolio. 
E) The company has no difficulty in keeping its corporate managers informed about the complexitities of each business. 
A) The company has to achieve coordination between business units. 
B) The company has narrow organizational competencies. 
C) The company has superior strategic management and organizational design. 
D) The company has no bureaucratic costs that arise from the number of businesses in its portfolio. 
E) The company has no difficulty in keeping its corporate managers informed about the complexitities of each business.

Diversification may dissipate value if it is wrongly based on:

In 2007,Google bought YouTube.This is an example of which of the following?

A laundromat and a pool hall together invest in a new store,where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?

Which of the following seems to be a major determinant of a new venture's success?

An advantage of a joint venture is that it allows a company to quickly gain entry into a new industry where barriers are high.

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Which of the following is not necessary for a successful acquisition?

Internal new ventures can generally be executed far more quickly than acquisitions.

Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry.

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

Research suggests that small-scale entry into a new business is the best way for an internal venture to succeed.

When one or more components of a company's value chain are applicable to a wide variety of industrial and commercial situations,which of the following strategies should a company pursue?

What is perhaps the most important reason why acquisitions fail?

The coordination required to realize value from a diversification strategy based on transferring,sharing,or leveraging competencies is a major source of bureaucratic costs.

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because it can more effectively pool,share,and utilize resources or capabilities.

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create:

Free cash flow is defined as:

Which of the following is the probable consequence of a company's inability to integrate two divergent corporate cultures after an acquisition?

Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Performance, Governance, and Business Ethics

Implementing Strategy Through Organization

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Exam 10: Corporate Level Strategy: Related and Unrelated Diversification

Diversification may dissipate value if it is wrongly based on:

In 2007,Google bought YouTube.This is an example of which of the following?

A laundromat and a pool hall together invest in a new store,where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

Which of the following reasons can make a diversification strategy an unwise course of action for a company to pursue?

Which of the following seems to be a major determinant of a new venture's success?

An advantage of a joint venture is that it allows a company to quickly gain entry into a new industry where barriers are high.

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Which of the following is not necessary for a successful acquisition?

Internal new ventures can generally be executed far more quickly than acquisitions.

Transferring competencies across industries involves taking a distinctive competency developed in one industry and implanting it in an existing business unit in another industry.

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

Research suggests that small-scale entry into a new business is the best way for an internal venture to succeed.

When one or more components of a company's value chain are applicable to a wide variety of industrial and commercial situations,which of the following strategies should a company pursue?

What is perhaps the most important reason why acquisitions fail?

The coordination required to realize value from a diversification strategy based on transferring,sharing,or leveraging competencies is a major source of bureaucratic costs.

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because it can more effectively pool,share,and utilize resources or capabilities.

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create:

Free cash flow is defined as:

Which of the following is the probable consequence of a company's inability to integrate two divergent corporate cultures after an acquisition?

Which of the following may be true for a company pursuing a strategy of unrelated diversification rather than a strategy of related diversification?

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Performance, Governance, and Business Ethics

Implementing Strategy Through Organization

Filters