Exam 6: Corporate-Level Strategy

Firms using the related constrained strategy share activities in order to create value.

The Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing. This excess capacity will be useful in

The risk for firms that follow the unrelated diversification strategy in developed economies is that

Hutchison Whampoa Limited (HWL) has businesses in ports and related services, telecommunications, property and hotels, retail and manufacturing, and energy and infrastructure. HWL makes no efforts to share activities or transfer core competencies among the businesses. HWL is following a strategy of__________diversification.

Contract manufacturers who manage their customers' entire product line, and offer services ranging from inventory management to delivery and after-sales services are prime examples of vertical integration.

When firms share activities across units, they are often able to achieve increased value.

The more sharing of resources and activities among businesses, the more ____ is the relatedness of the diversification.

If managers diversify a firm in a way that does not produce value, the firm risks capital market intervention.

A major advantage of diversification is that overall monitoring costs are reduced, since each separate business comes under the control of corporate headquarters.

Many manufacturing firms are de-integrating and moving to independent supplier networks.

Which acquisition would be considered the LEAST related?

Successful unrelated diversification through restructuring is typically accomplished by

If the businesses in the corporate portfolio are not worth more under the management of the corporation than they would be under any other ownership, then the corporate-level strategy has failed.

Synergy exists when the value created by business units working together exceeds the value that those same units create working independently.

Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies.

A firm practicing unrelated diversification can make better capital allocations to its subsidiary businesses than the external capital market can for all the following reasons EXCEPT

Compared to diversification that is grounded in intangible resources, diversification based on financial resources only is more visible to competitors and thus more imitable and less likely to create value on a long term basis.

The use of e-commerce to allow firms to reduce the costs of processing transactions while improving their supply-chain management skills and tightening the control of their inventories is beginning to replace

Which of the following resources are more likely to create value in the diversification process?

As noted in the Opening Case, in order to create synergy between its wine and beer business, Foster's Group used the same sales force to sell mass market beer, cheap spirits, and premium wine. The sharing of these activities resulted in __________.