Question 1

Joint ventures:

Accepted Answer

A)  are an alternative to new ventures. 
B)  are attractive when speed is important. 
C)  are attractive when entry barriers are high. 
D)  should be done on a small scale. 
E)  reduce the risk of loss of proprietary knowledge. 
A)  are an alternative to new ventures. 
B)  are attractive when speed is important. 
C)  are attractive when entry barriers are high. 
D)  should be done on a small scale. 
E)  reduce the risk of loss of proprietary knowledge. A

Question 2

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 E

Question 3

Product bundling refers to:

Accepted Answer

A)  preparation of products for shipment. 
B)  a complete package of related products. 
C)  a method of stocking products efficiently. 
D)  an inventory procedure for ensuring effective counting of products. 
E)  a package of unrelated products. 
A)  preparation of products for shipment. 
B)  a complete package of related products. 
C)  a method of stocking products efficiently. 
D)  an inventory procedure for ensuring effective counting of products. 
E)  a package of unrelated products. B

Question 4

Sara Lee Corp., a clothing firm, purchased Platex Apparel Inc. This purchase helped to make Sara Lee Corp. one of the largest makers of women's apparel in the United States. Sara Lee Corp. utilized an acquisition strategy.

Accepted Answer

A) True 
 B)False

Question 5

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.

Accepted Answer

A) True 
 B)False

Question 6

Research suggests that companies that acquire many businesses over time become expert in this process and so can generate significant value from their acquisitions.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A company can pursue relative diversification to enhance the competitive position of its core business.

Accepted Answer

A) True 
 B)False

Question 9

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 10

What is the process of transferring resources to and creating a new business unit in a new industry called?

Accepted Answer

A)  External new venturing 
B)  Exportation of resources 
C)  Intrapreneuring 
D)  Risk avoidance 
E)  Internal new venturing 
A)  External new venturing 
B)  Exportation of resources 
C)  Intrapreneuring 
D)  Risk avoidance 
E)  Internal new venturing

Question 11

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 12

Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?

Accepted Answer

A)  The strategy requires the head office to evaluate each business unit as a stand-alone operation. 
B)  The strategy allows a company to realize cost economies among business units. 
C)  The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale. 
D)  The strategy requires managers to be aware of the costs of coordination. 
E)  The strategy requires close coordination among different business units. 
A)  The strategy requires the head office to evaluate each business unit as a stand-alone operation. 
B)  The strategy allows a company to realize cost economies among business units. 
C)  The strategy may allow a company to use shared resources more intensively, thereby realizing economies of scale. 
D)  The strategy requires managers to be aware of the costs of coordination. 
E)  The strategy requires close coordination among different business units.

Question 13

General organizational competencies are found:

Accepted Answer

A)  in the skills of a company's top managers and functional experts. 
B)  at low levels among workers and other employees in the organization. 
C)  exclusively among technology professionals. 
D)  in feedback given by customers. 
E)  in changes occurring within an industry. 
A)  in the skills of a company's top managers and functional experts. 
B)  at low levels among workers and other employees in the organization. 
C)  exclusively among technology professionals. 
D)  in feedback given by customers. 
E)  in changes occurring within an industry.

Question 14

Which of the following is not a general organizational competency?

Accepted Answer

A)  Entrepreneurial capabilities 
B)  Capabilities in organizational design 
C)  Superior strategic capabilities 
D)  Product bundling 
E)  Commonality 
A)  Entrepreneurial capabilities 
B)  Capabilities in organizational design 
C)  Superior strategic capabilities 
D)  Product bundling 
E)  Commonality

Question 15

Company leaders that base their diversification strategy on transferring competencies tend to acquire new businesses that are ____ to their existing business activities.

Accepted Answer

A)  unrelated 
B)  not comparable 
C)  opposed 
D)  related 
E)  identical 
A)  unrelated 
B)  not comparable 
C)  opposed 
D)  related 
E)  identical

Question 16

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 17

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.

Question 18

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 19

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 20

Diversification is the process of a company entering new industries distinct from its core industry, using a multibusiness model.

Accepted Answer

A) True 
 B)False

Joint ventures:

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

Product bundling refers to:

Sara Lee Corp., a clothing firm, purchased Platex Apparel Inc. This purchase helped to make Sara Lee Corp. one of the largest makers of women's apparel in the United States. Sara Lee Corp. utilized an acquisition strategy.

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.

Research suggests that companies that acquire many businesses over time become expert in this process and so can generate significant value from their acquisitions.

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

A company can pursue relative diversification to enhance the competitive position of its core business.

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

What is the process of transferring resources to and creating a new business unit in a new industry called?

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

Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?

General organizational competencies are found:

Which of the following is not a general organizational competency?

Company leaders that base their diversification strategy on transferring competencies tend to acquire new businesses that are ____ to their existing business activities.

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

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

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

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

Diversification is the process of a company entering new industries distinct from its core industry, using a multibusiness model.

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

Joint ventures:

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

Product bundling refers to:

Sara Lee Corp., a clothing firm, purchased Platex Apparel Inc. This purchase helped to make Sara Lee Corp. one of the largest makers of women's apparel in the United States. Sara Lee Corp. utilized an acquisition strategy.

An advantage of unrelated diversification is that competencies can be shared and leveraged throughout the value chain activities.

Research suggests that companies that acquire many businesses over time become expert in this process and so can generate significant value from their acquisitions.

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

A company can pursue relative diversification to enhance the competitive position of its core business.

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

What is the process of transferring resources to and creating a new business unit in a new industry called?

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

Which of the following statements is not generally true of a diversification strategy based on the realization of economies of scope?

General organizational competencies are found:

Which of the following is not a general organizational competency?

Company leaders that base their diversification strategy on transferring competencies tend to acquire new businesses that are ____ to their existing business activities.

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

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

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

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

Diversification is the process of a company entering new industries distinct from its core industry, using a multibusiness model.

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