Question 1

Vertical integration is attractive when

Accepted Answer

A) administrative costs are higher than transaction costs. 
B) transaction costs are higher than administrative costs. 
C) transaction costs and administrative costs are equal. 
D) search costs are higher than monitoring costs. 
A) administrative costs are higher than transaction costs. 
B) transaction costs are higher than administrative costs. 
C) transaction costs and administrative costs are equal. 
D) search costs are higher than monitoring costs.

Question 2

Discuss the three basic means by which a firm can go about achieving synergy and create value for its shareholders.

Accepted Answer

Feedback: There are three basic means.Fi

Question 3

Divesting of businesses can accomplish many different objectives,except

Accepted Answer

A) enabling managers to focus their efforts more directly on the core businesses of the firm. 
B) providing the firm with more resources to spend on more attractive alternatives. 
C) raising cash to help fund existing businesses. 
D) dispersing manager focus. 
A) enabling managers to focus their efforts more directly on the core businesses of the firm. 
B) providing the firm with more resources to spend on more attractive alternatives. 
C) raising cash to help fund existing businesses. 
D) dispersing manager focus.

Question 4

Discuss and explain the three criteria that a core competence must meet if it is to create value and to provide a viable basis for synergy among the businesses in a corporation.

Accepted Answer

Feedback: For a core competence to creat

Question 5

Unbalanced capacities that limit cost savings,difficulties in combining specializations,and reduced flexibility are disadvantages associated with

Accepted Answer

A) strategic alliances. 
B) vertical integration. 
C) horizontal integration. 
D) divestiture. 
A) strategic alliances. 
B) vertical integration. 
C) horizontal integration. 
D) divestiture.

Question 6

The primary means by which a firm can diversify are ________,________,and ________.

Accepted Answer

A) mergers and acquisitions;differentiation;overall cost leadership 
B) mergers and acquisitions;joint ventures and strategic alliances;internal development 
C) joint ventures and strategic alliances;integration of value chain activities;acquiring human capital 
D) mergers and acquisitions;internal development;differentiation 
A) mergers and acquisitions;differentiation;overall cost leadership 
B) mergers and acquisitions;joint ventures and strategic alliances;internal development 
C) joint ventures and strategic alliances;integration of value chain activities;acquiring human capital 
D) mergers and acquisitions;internal development;differentiation

Question 7

Gillette developed the Fusion and Mach 3 shaving systems.These products created superior customer value as a result of the company core competency in research and development.

Accepted Answer

A) True 
 B)False

Question 8

The corporate office of Novartis,formerly Ciba-Geigy,acts to improve many key activities,including resource allocation and reward and evaluation systems.This is an example of creating value by using

Accepted Answer

A) related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope. 
B) unrelated diversification to acquire financial synergies through portfolio management. 
C) related diversification to acquire market power by leveraging pooled negotiating power. 
D) related diversification to acquire parenting synergies through corporate restructuring and parenting. 
A) related diversification to achieve value by leveraging pooled negotiating power to attain economies of scope. 
B) unrelated diversification to acquire financial synergies through portfolio management. 
C) related diversification to acquire market power by leveraging pooled negotiating power. 
D) related diversification to acquire parenting synergies through corporate restructuring and parenting.

Question 9

An acquisition that results in ________ commonly indicates that expectations were not met.

Accepted Answer

A) expansion 
B) divestiture 
C) cost savings 
D) increased sales 
A) expansion 
B) divestiture 
C) cost savings 
D) increased sales

Question 10

At Cooper Industries,there are few similarities in the products it makes or the industries in which it completes.The corporate office adds value through such activities as improving their accounting activities and centralizing union negotiations.This is an example of creating value by using

Accepted Answer

A) related diversification to acquire economies of scope by leveraging pooled negotiating power. 
B) related diversification to acquire market power by leveraging core competencies. 
C) unrelated diversification to acquire financial synergies through portfolio management. 
D) unrelated diversification to acquire synergies through corporate restructuring and parenting. 
A) related diversification to acquire economies of scope by leveraging pooled negotiating power. 
B) related diversification to acquire market power by leveraging core competencies. 
C) unrelated diversification to acquire financial synergies through portfolio management. 
D) unrelated diversification to acquire synergies through corporate restructuring and parenting.

Question 11

Diversified public corporations,such as Berkshire Hathaway and Virgin Group,create value through management expertise by improving plans and budgets.This is an example of a related diversification strategy.

Accepted Answer

A) True 
 B)False

Question 12

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input to its manufacturing process.This is an example of creating value by using

Accepted Answer

A) related diversification to acquire market power by pooling negotiating power. 
B) related diversification to acquire economies of scope by leveraging core competencies. 
C) related diversification to acquire market power by integrating vertically. 
D) related diversification to acquire economies of scope by integrating vertically to acquire market power. 
A) related diversification to acquire market power by pooling negotiating power. 
B) related diversification to acquire economies of scope by leveraging core competencies. 
C) related diversification to acquire market power by integrating vertically. 
D) related diversification to acquire economies of scope by integrating vertically to acquire market power.

Question 13

Diversification initiatives must be justified by the creation of value for shareholders.

Accepted Answer

A) True 
 B)False

Question 14

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

Accepted Answer

A) True 
 B)False

Question 15

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?

Accepted Answer

A) Portfolio models compare SBUs on only two dimensions under the assumption that these are the only factors that matter. 
B) Portfolio models view each SBU as a stand-alone entity. 
C) Portfolio models rely on loose rules regarding resource allocation across the SBUs. 
D) The evaluation process risks becoming mechanical and oversimplified. 
A) Portfolio models compare SBUs on only two dimensions under the assumption that these are the only factors that matter. 
B) Portfolio models view each SBU as a stand-alone entity. 
C) Portfolio models rely on loose rules regarding resource allocation across the SBUs. 
D) The evaluation process risks becoming mechanical and oversimplified.

Question 17

Capital restructuring involves changing the ________ mix.

Accepted Answer

A) cash 
B) human resource 
C) debt-equity 
D) management 
A) cash 
B) human resource 
C) debt-equity 
D) management

Question 18

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

Accepted Answer

A) True 
 B)False

Question 19

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation,it must at least create superior customer value and it must be difficult to imitate.

Accepted Answer

A) True 
 B)False

Question 20

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input into its manufacturing process.This is an example of

Accepted Answer

A) vertical integration. 
B) sharing activities. 
C) pooled negotiating power. 
D) leveraging core competencies. 
A) vertical integration. 
B) sharing activities. 
C) pooled negotiating power. 
D) leveraging core competencies.

Vertical integration is attractive when

Discuss the three basic means by which a firm can go about achieving synergy and create value for its shareholders.

Divesting of businesses can accomplish many different objectives,except

Discuss and explain the three criteria that a core competence must meet if it is to create value and to provide a viable basis for synergy among the businesses in a corporation.

Unbalanced capacities that limit cost savings,difficulties in combining specializations,and reduced flexibility are disadvantages associated with

The primary means by which a firm can diversify are ,,and .

Gillette developed the Fusion and Mach 3 shaving systems.These products created superior customer value as a result of the company core competency in research and development.

The corporate office of Novartis,formerly Ciba-Geigy,acts to improve many key activities,including resource allocation and reward and evaluation systems.This is an example of creating value by using

An acquisition that results in ________ commonly indicates that expectations were not met.

At Cooper Industries,there are few similarities in the products it makes or the industries in which it completes.The corporate office adds value through such activities as improving their accounting activities and centralizing union negotiations.This is an example of creating value by using

Diversified public corporations,such as Berkshire Hathaway and Virgin Group,create value through management expertise by improving plans and budgets.This is an example of a related diversification strategy.

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input to its manufacturing process.This is an example of creating value by using

Diversification initiatives must be justified by the creation of value for shareholders.

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?

Capital restructuring involves changing the ________ mix.

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation,it must at least create superior customer value and it must be difficult to imitate.

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input into its manufacturing process.This is an example of

Strategic Management: Creating Competitive Advantages

Analyzing the External Environment of the Firm: Creating Competitive Advantages

Assessing the Internal Environment of the Firm

Recognizing a Firms Intellectual Assets: Moving Beyond a Firms Tangible Resources

Business-Level Strategy: Creating and Sustaining Competitive Advantages

International Strategy: Creating Value in Global Markets

Entrepreneurial Strategy and Competitive Dynamics

Strategic Control and Corporate Governance

Creating Effective Organizational Designs

Strategic Leadership: Creating a Learning Organization and an Ethical Organization

Managing Innovation and Fostering Corporate Entrepreneurship

Filters

Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

Vertical integration is attractive when

Discuss the three basic means by which a firm can go about achieving synergy and create value for its shareholders.

Divesting of businesses can accomplish many different objectives,except

Discuss and explain the three criteria that a core competence must meet if it is to create value and to provide a viable basis for synergy among the businesses in a corporation.

Unbalanced capacities that limit cost savings,difficulties in combining specializations,and reduced flexibility are disadvantages associated with

The primary means by which a firm can diversify are ________,________,and ________.

Gillette developed the Fusion and Mach 3 shaving systems.These products created superior customer value as a result of the company core competency in research and development.

The corporate office of Novartis,formerly Ciba-Geigy,acts to improve many key activities,including resource allocation and reward and evaluation systems.This is an example of creating value by using

An acquisition that results in ________ commonly indicates that expectations were not met.

At Cooper Industries,there are few similarities in the products it makes or the industries in which it completes.The corporate office adds value through such activities as improving their accounting activities and centralizing union negotiations.This is an example of creating value by using

Diversified public corporations,such as Berkshire Hathaway and Virgin Group,create value through management expertise by improving plans and budgets.This is an example of a related diversification strategy.

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input to its manufacturing process.This is an example of creating value by using

Diversification initiatives must be justified by the creation of value for shareholders.

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?

Capital restructuring involves changing the ________ mix.

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation,it must at least create superior customer value and it must be difficult to imitate.

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input into its manufacturing process.This is an example of

Strategic Management: Creating Competitive Advantages

Analyzing the External Environment of the Firm: Creating Competitive Advantages

Assessing the Internal Environment of the Firm

Recognizing a Firms Intellectual Assets: Moving Beyond a Firms Tangible Resources

Business-Level Strategy: Creating and Sustaining Competitive Advantages

International Strategy: Creating Value in Global Markets

Entrepreneurial Strategy and Competitive Dynamics

Strategic Control and Corporate Governance

Creating Effective Organizational Designs

Strategic Leadership: Creating a Learning Organization and an Ethical Organization

Managing Innovation and Fostering Corporate Entrepreneurship

Filters

The primary means by which a firm can diversify are ,,and .