Question 1

According to Michael Porter, industry attractiveness is a sufficient justification for diversification.

Accepted Answer

A) True 
 B)False

Question 2

If a utility company supplies both gas and electricity to its customers, it can exploit economies of scope in billing and customer service.

Accepted Answer

A) True 
 B)False

Question 3

The primary motive for diversification during the period 1960-1980 was the quest to create shareholder value.

Accepted Answer

A) True 
 B)False

Question 4

Diversification that reduces unsystematic risk is likely to be associated with less variance of a firm's cash flows.This is likely to benefit:

Accepted Answer

A) Shareholders, because they are sensitive to all forms of risk 
B) Bondholders, because greater variability of cash flows increases a firm's vulnerability to default on payments to bondholders 
C) Both groups 
D) Neither group 
A) Shareholders, because they are sensitive to all forms of risk 
B) Bondholders, because greater variability of cash flows increases a firm's vulnerability to default on payments to bondholders 
C) Both groups 
D) Neither group

Question 5

The general trend of the past four decades has been for companies to divest their "noncore" businesses.Exceptions to this trend include:

Accepted Answer

A) Large e-commerce companies such as Amazon, Alphabet, Alibaba, and Tencent 
B) Large business groups in emerging market countries 
C) Both (a) and (b) 
D) Neither (a) nor (b)-the refocussing trend is general across sectors and across countries. 
A) Large e-commerce companies such as Amazon, Alphabet, Alibaba, and Tencent 
B) Large business groups in emerging market countries 
C) Both (a) and (b) 
D) Neither (a) nor (b)-the refocussing trend is general across sectors and across countries.

Question 6

The key difference between economies of scale and economies of scope:

Accepted Answer

A) Economies of scale relate to manufacturing activities; economies of scope relate to a wide range of functions 
B) Economies of scale relate to expanding the output of a single product; economies of scope relate to expansion across multiple products 
C) There is no practical difference 
D) Scale economies are relevant to business strategy; economies of scope to corporate strategy. 
A) Economies of scale relate to manufacturing activities; economies of scope relate to a wide range of functions 
B) Economies of scale relate to expanding the output of a single product; economies of scope relate to expansion across multiple products 
C) There is no practical difference 
D) Scale economies are relevant to business strategy; economies of scope to corporate strategy.

Question 7

The critical test of whether diversification will create shareholder value is whether it will contribute to competitive advantage.

Accepted Answer

A) True 
 B)False

Question 8

Diversiﬁcation decisions by ﬁrms involve two key issues: how attractive is the industry to be entered and can the ﬁrm establish a competitive advantage within it?

Accepted Answer

A) True 
 B)False

According to Michael Porter, industry attractiveness is a sufficient justification for diversification.

If a utility company supplies both gas and electricity to its customers, it can exploit economies of scope in billing and customer service.

The primary motive for diversification during the period 1960-1980 was the quest to create shareholder value.

Diversification that reduces unsystematic risk is likely to be associated with less variance of a firm's cash flows.This is likely to benefit:

The general trend of the past four decades has been for companies to divest their "noncore" businesses.Exceptions to this trend include:

The key difference between economies of scale and economies of scope:

The critical test of whether diversification will create shareholder value is whether it will contribute to competitive advantage.

Diversiﬁcation decisions by ﬁrms involve two key issues: how attractive is the industry to be entered and can the ﬁrm establish a competitive advantage within it?

The Concept of Strategy

Goals, Values and Performance

Industry Analysis: the Fundamentals

Further Topics in Industry and Competitive Analysis

Analyzing Resources and Capabilities

Organization Structure and Management Systems: the Fundamentals of Strategy Implementation

The Sources and Dimensions of Competitive Advantage

Industry Evolution and Strategic Change

Technology-Based Industries and the Management of Innovation

Vertical Integration and the Scope of the Firm

Global Strategy and the Multinational Corporation

Implementing Corporate Strategy: Managing the Multibusiness Firm

External Growth Strategies: Mergers, Acquisitions, and Alliances

Current Trends in Strategic Management

Filters

Exam 12: Diversification Strategy

According to Michael Porter, industry attractiveness is a sufficient justification for diversification.

If a utility company supplies both gas and electricity to its customers, it can exploit economies of scope in billing and customer service.

The primary motive for diversification during the period 1960-1980 was the quest to create shareholder value.

Diversification that reduces unsystematic risk is likely to be associated with less variance of a firm's cash flows.This is likely to benefit:

The general trend of the past four decades has been for companies to divest their "noncore" businesses.Exceptions to this trend include:

The key difference between economies of scale and economies of scope:

The critical test of whether diversification will create shareholder value is whether it will contribute to competitive advantage.

Diversiﬁcation decisions by ﬁrms involve two key issues: how attractive is the industry to be entered and can the ﬁrm establish a competitive advantage within it?

The Concept of Strategy

Goals, Values and Performance

Industry Analysis: the Fundamentals

Further Topics in Industry and Competitive Analysis

Analyzing Resources and Capabilities

Organization Structure and Management Systems: the Fundamentals of Strategy Implementation

The Sources and Dimensions of Competitive Advantage

Industry Evolution and Strategic Change

Technology-Based Industries and the Management of Innovation

Vertical Integration and the Scope of the Firm

Global Strategy and the Multinational Corporation

Implementing Corporate Strategy: Managing the Multibusiness Firm

External Growth Strategies: Mergers, Acquisitions, and Alliances

Current Trends in Strategic Management

Filters