Question 1

Economies of scope can be defined as:

Accepted Answer

A) competencies that result from the skills of a company's top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company. 
B) some kind of skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers. 
C) the process of taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry. 
D) the process of taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit in a different industry. 
E) the synergies that arise when one or more of a diversified company's business units are able to lower costs or increase differentiation because they can more effectively pool, share, and utilize expensive resources or capabilities. 
A) competencies that result from the skills of a company's top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company. 
B) some kind of skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers. 
C) the process of taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry. 
D) the process of taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit in a different industry. 
E) the synergies that arise when one or more of a diversified company's business units are able to lower costs or increase differentiation because they can more effectively pool, share, and utilize expensive resources or capabilities.

Question 2

In which of the following industry environments are acquisitions most likely to be favored over new ventures?

Accepted Answer

A) An embryonic industry 
B) An industry in its later stages of growth 
C) An industry passing through the shakeout stage 
D) A mature industry 
E) A declining industry 
A) An embryonic industry 
B) An industry in its later stages of growth 
C) An industry passing through the shakeout stage 
D) A mature industry 
E) A declining industry

Question 3

Companies with a strong track record of internal new venturing generally excel at research and development.

Accepted Answer

A) True 
 B)False

Question 4

The three main types of diversification strategies are:

Accepted Answer

A) acquisitions, joint ventures, and divestments. 
B) acquisitions, mergers, and buy outs. 
C) acquisitions, internal new ventures, and joint ventures. 
D) related acquisitions, unrelated acquisitions, and mergers. 
E) joint ventures, strategic alliances, and long-term contracts. 
A) acquisitions, joint ventures, and divestments. 
B) acquisitions, mergers, and buy outs. 
C) acquisitions, internal new ventures, and joint ventures. 
D) related acquisitions, unrelated acquisitions, and mergers. 
E) joint ventures, strategic alliances, and long-term contracts.

Question 5

In which of the following cases are bureaucratic costs likely to be lowest?

Accepted Answer

A) A vertically integrated company with five divisions that pursues full integration 
B) A company with five divisions that pursues related diversification based on economies of scope 
C) A company with five divisions that pursues related diversification based on transferring competencies 
D) A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring 
E) A company with twenty divisions that pursues taper integration 
A) A vertically integrated company with five divisions that pursues full integration 
B) A company with five divisions that pursues related diversification based on economies of scope 
C) A company with five divisions that pursues related diversification based on transferring competencies 
D) A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring 
E) A company with twenty divisions that pursues taper integration

Question 6

At Burger King,multiple items such as a cheeseburger,french fries,and a drink are combined together to create a complete meal.This is an example of diversification.

Accepted Answer

A) True 
 B)False

Question 7

If a company is to increase the probability of a new product's commercial success,the company must foster close links between:

Accepted Answer

A) marketing and sales. 
B) engineering and advertising. 
C) quality assurance and inventory management. 
D) research and development (R&
D)  and marketing. 
E) accounting and industrial engineering. 
A) marketing and sales. 
B) engineering and advertising. 
C) quality assurance and inventory management. 
D) research and development (R&
D)  and marketing. 
E) accounting and industrial engineering.

Question 8

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?

Accepted Answer

A) Poor post-acquisition integration 
B) Overestimation of the potential gains to be derived from synergy 
C) The high cost of making acquisitions 
D) Lack of pre-acquisition screening 
E) Overestimation of the potential costs of realizing synergies 
A) Poor post-acquisition integration 
B) Overestimation of the potential gains to be derived from synergy 
C) The high cost of making acquisitions 
D) Lack of pre-acquisition screening 
E) Overestimation of the potential costs of realizing synergies

Question 9

A company should pursue related diversification instead of unrelated diversification when the company's:

Accepted Answer

A) core skills are applicable to a wide variety of industrial and commercial situations. 
B) core skills are highly specialized and have few applications outside the core business. 
C) top managers are skilled at acquiring and turning around poorly run enterprises. 
D) main objective is to maximize its growth. 
E) free cash flow is high enough that it has funds available for investment. 
A) core skills are applicable to a wide variety of industrial and commercial situations. 
B) core skills are highly specialized and have few applications outside the core business. 
C) top managers are skilled at acquiring and turning around poorly run enterprises. 
D) main objective is to maximize its growth. 
E) free cash flow is high enough that it has funds available for investment.

Question 10

Acquisitions often fail because of:

Accepted Answer

A) poor commercialization. 
B) pre-acquisition screening that increases the time it takes to enter a market. 
C) large-scale entry. 
D) differences in corporate culture. 
E) slowness in establishing significant market presence. 
A) poor commercialization. 
B) pre-acquisition screening that increases the time it takes to enter a market. 
C) large-scale entry. 
D) differences in corporate culture. 
E) slowness in establishing significant market presence.

Question 11

Research finds that the higher the number of business units in a company's portfolio,the easier it is for corporate managers to remain informed about the complexities of each business.

Accepted Answer

A) True 
 B)False

Question 12

The greater the number of business units in a company's portfolio,the ____ it is for corporate managers to understand the complexities of each business.

Accepted Answer

A) easier 
B) more difficult 
C) less important 
D) less expensive 
E) more meaningless 
A) easier 
B) more difficult 
C) less important 
D) less expensive 
E) more meaningless

Question 13

A joint venture allows a company to share the risks and costs associated with establishing a new business unit with another company.

Accepted Answer

A) True 
 B)False

Question 14

What are the two general types of diversification and when would one be preferred over the other?

Accepted Answer

Diversification can take one of two form

Question 15

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

Accepted Answer

A) Diversify through acquisition 
B) Do not diversify at all 
C) Diversify with an internal new venture 
D) Diversify with a joint venture 
E) Diversify through vertical integration 
A) Diversify through acquisition 
B) Do not diversify at all 
C) Diversify with an internal new venture 
D) Diversify with a joint venture 
E) Diversify through vertical integration

Question 16

A company should pursue unrelated diversification instead of related diversification when:

Accepted Answer

A) its core skills are highly specialized and have few applications outside its core business. 
B) the company's top managers are skilled at acquiring and turning around poorly run enterprises. 
C) its core technological skills are applicable to a wide variety of industrial and commercial situations. 
D) it wants to maximize growth. 
E) the bureaucratic costs of implementation do not exceed the value that can be created by realizing economies of scope. 
A) its core skills are highly specialized and have few applications outside its core business. 
B) the company's top managers are skilled at acquiring and turning around poorly run enterprises. 
C) its core technological skills are applicable to a wide variety of industrial and commercial situations. 
D) it wants to maximize growth. 
E) the bureaucratic costs of implementation do not exceed the value that can be created by realizing economies of scope.

Question 17

Free cash flow refers to additional funds from a government stimulus program.

Accepted Answer

A) True 
 B)False

Question 18

New ventures are a more attractive strategy than acquisitions when:

Accepted Answer

A) entry barriers are high. 
B) exit barriers are high. 
C) a company's business model is based on using its technology to innovate new kinds of products for related markets. 
D) it needs to move fast to establish a presence in an industry, commonly an embryonic or growth industry. 
E) the company must make the huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry. 
A) entry barriers are high. 
B) exit barriers are high. 
C) a company's business model is based on using its technology to innovate new kinds of products for related markets. 
D) it needs to move fast to establish a presence in an industry, commonly an embryonic or growth industry. 
E) the company must make the huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry.

Question 19

At its simplest level,a joint venture may be thought of as:

Accepted Answer

A) a merger of two companies. 
B) an acquisition of a smaller company by a larger company. 
C) a form of strategic outsourcing. 
D) a sign of weakness on the part of one of the companies. 
E) pooling of resources by two or more firms to create new business. 
A) a merger of two companies. 
B) an acquisition of a smaller company by a larger company. 
C) a form of strategic outsourcing. 
D) a sign of weakness on the part of one of the companies. 
E) pooling of resources by two or more firms to create new business.

Question 20

Which of the following entry strategies should be used when speed is an important consideration?

Accepted Answer

A) Internal new venture 
B) Acquisition 
C) Joint venture 
D) Unrelated diversification 
E) Related diversification 
A) Internal new venture 
B) Acquisition 
C) Joint venture 
D) Unrelated diversification 
E) Related diversification

Economies of scope can be defined as:

In which of the following industry environments are acquisitions most likely to be favored over new ventures?

Companies with a strong track record of internal new venturing generally excel at research and development.

The three main types of diversification strategies are:

In which of the following cases are bureaucratic costs likely to be lowest?

At Burger King,multiple items such as a cheeseburger,french fries,and a drink are combined together to create a complete meal.This is an example of diversification.

If a company is to increase the probability of a new product's commercial success,the company must foster close links between:

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?

A company should pursue related diversification instead of unrelated diversification when the company's:

Acquisitions often fail because of:

Research finds that the higher the number of business units in a company's portfolio,the easier it is for corporate managers to remain informed about the complexities of each business.

The greater the number of business units in a company's portfolio,the ____ it is for corporate managers to understand the complexities of each business.

A joint venture allows a company to share the risks and costs associated with establishing a new business unit with another company.

What are the two general types of diversification and when would one be preferred over the other?

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

A company should pursue unrelated diversification instead of related diversification when:

Free cash flow refers to additional funds from a government stimulus program.

New ventures are a more attractive strategy than acquisitions when:

At its simplest level,a joint venture may be thought of as:

Which of the following entry strategies should be used when speed is an important consideration?

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

Exam 10: Corporate Level Strategy: Related and Unrelated Diversification

Economies of scope can be defined as:

In which of the following industry environments are acquisitions most likely to be favored over new ventures?

Companies with a strong track record of internal new venturing generally excel at research and development.

The three main types of diversification strategies are:

In which of the following cases are bureaucratic costs likely to be lowest?

At Burger King,multiple items such as a cheeseburger,french fries,and a drink are combined together to create a complete meal.This is an example of diversification.

If a company is to increase the probability of a new product's commercial success,the company must foster close links between:

Which of the following is not a reason for the failure of an acquisition to generate the gains originally expected of it?

A company should pursue related diversification instead of unrelated diversification when the company's:

Acquisitions often fail because of:

Research finds that the higher the number of business units in a company's portfolio,the easier it is for corporate managers to remain informed about the complexities of each business.

The greater the number of business units in a company's portfolio,the ____ it is for corporate managers to understand the complexities of each business.

A joint venture allows a company to share the risks and costs associated with establishing a new business unit with another company.

What are the two general types of diversification and when would one be preferred over the other?

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

A company should pursue unrelated diversification instead of related diversification when:

Free cash flow refers to additional funds from a government stimulus program.

New ventures are a more attractive strategy than acquisitions when:

At its simplest level,a joint venture may be thought of as:

Which of the following entry strategies should be used when speed is an important consideration?

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