Question 1

Generally internal development of a new business has appeal,except when:

Accepted Answer

A)  the parent company has most of the required skills and resources required to compete effectively. 
B)  there is ample time to launch the business. 
C)  the startup does not have to compete on a head-to-head basis with powerful,bigger rivals. 
D)  adding new production capacity will not affect supply-demand balances. 
E)  incumbent firms are likely to be fast or effective in preempting a new entrant's efforts to crack the market. 
A)  the parent company has most of the required skills and resources required to compete effectively. 
B)  there is ample time to launch the business. 
C)  the startup does not have to compete on a head-to-head basis with powerful,bigger rivals. 
D)  adding new production capacity will not affect supply-demand balances. 
E)  incumbent firms are likely to be fast or effective in preempting a new entrant's efforts to crack the market.

Question 2

Shareholder interests are generally best served by concentrating corporate resources on businesses that can contend for market leadership.True or false? Explain your answer.

Accepted Answer

A) True 
 B)False

Question 3

A "cash cow" type of business:

Accepted Answer

A)  generates unusually high profits and returns on equity investment. 
B)  is so profitable that it has no long-term debt. 
C)  generates cash surplus over what is needed to adequately fund their operation,growth,and reinvestment. 
D)  has a strong competitive advantage and can generate profits and returns on investment and provide dividend payments to shareholders. 
E)  has good strategic fit with a cash hog business. 
A)  generates unusually high profits and returns on equity investment. 
B)  is so profitable that it has no long-term debt. 
C)  generates cash surplus over what is needed to adequately fund their operation,growth,and reinvestment. 
D)  has a strong competitive advantage and can generate profits and returns on investment and provide dividend payments to shareholders. 
E)  has good strategic fit with a cash hog business.

Question 4

Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of the parts-an outcome known as:

Accepted Answer

A)  computation effect. 
B)  value generation. 
C)  synergy outcome. 
D)  value depth. 
E)  definitive value. 
A)  computation effect. 
B)  value generation. 
C)  synergy outcome. 
D)  value depth. 
E)  definitive value.

Question 5

Which of the following is NOT one of the appeals of related diversification?

Accepted Answer

A)  It can offer opportunities for transferring expertise,technology,and other capabilities from one business to another. 
B)  It can offer opportunities for reducing costs and for leveraging use of a competitively powerful brand name. 
C)  Related diversification is particularly well-suited for the use of first-mover strategies and capturing valuable financial fits. 
D)  It may present opportunities for cross-business collaboration to create valuable new competencies and capabilities. 
E)  The relatedness among the different businesses provides sharper focus for managing diversification and a useful degree of strategic unity across the company's various business activities. 
A)  It can offer opportunities for transferring expertise,technology,and other capabilities from one business to another. 
B)  It can offer opportunities for reducing costs and for leveraging use of a competitively powerful brand name. 
C)  Related diversification is particularly well-suited for the use of first-mover strategies and capturing valuable financial fits. 
D)  It may present opportunities for cross-business collaboration to create valuable new competencies and capabilities. 
E)  The relatedness among the different businesses provides sharper focus for managing diversification and a useful degree of strategic unity across the company's various business activities.

Question 6

The attractiveness test is the most important test for determining whether diversification into a new business is likely to result in 1 + 1 = 3 increases in shareholder value (as opposed to simply a 1 + 1 = 2 type of increase).True or false? Justify and explain your answer.

Accepted Answer

The answer of The attractiveness test is the most important...

Question 7

Besides financial cash flow considerations,there are two other factors to consider in assessing whether a diversified company's businesses exhibit good financial fit,namely:

Accepted Answer

A)  does each of the businesses adequately contribute to achieving company-wide performance targets and does the corporation have adequate financial strength to fund its different businesses. 
B)  does each of the businesses operate in sound financial manner and can they provide a continuing earnings stream. 
C)  does each of the businesses generate sufficient free cash flow to operate and can they successfully manage their business model independently. 
D)  does each of the businesses when combined provide synergistic benefits and can they maintain the synergy savings over time. 
E)  All of these. 
A)  does each of the businesses adequately contribute to achieving company-wide performance targets and does the corporation have adequate financial strength to fund its different businesses. 
B)  does each of the businesses operate in sound financial manner and can they provide a continuing earnings stream. 
C)  does each of the businesses generate sufficient free cash flow to operate and can they successfully manage their business model independently. 
D)  does each of the businesses when combined provide synergistic benefits and can they maintain the synergy savings over time. 
E)  All of these.

Question 8

Assessments of the long-term attractiveness of each industry represented in a diversified company's lineup of businesses should be based on:

Accepted Answer

A)  a complete value chain analysis of each industry. 
B)  whether the industries have the same kinds of driving forces. 
C)  how many companies in each industry are making money and how many are losing money. 
D)  quantitative industry attractiveness scores derived from rating each industry on several relevant attractiveness measures (weighted according to their relative importance in determining overall attractiveness). 
E)  the competitive advantage potential offered by each industry's key success factors. 
A)  a complete value chain analysis of each industry. 
B)  whether the industries have the same kinds of driving forces. 
C)  how many companies in each industry are making money and how many are losing money. 
D)  quantitative industry attractiveness scores derived from rating each industry on several relevant attractiveness measures (weighted according to their relative importance in determining overall attractiveness). 
E)  the competitive advantage potential offered by each industry's key success factors.

Question 9

Capturing cross-business strategic fit benefits via a strategy of related diversification builds:

Accepted Answer

A)  shareholder value in ways that shareholders cannot undertake by simply owning a portfolio of stocks in companies in different industries. 
B)  shareholder value by eliminating the opportunity for weak performing firms to survive. 
C)  firms that struggle to attain economies of scale and scope to a heightened level of effectiveness. 
D)  firms that develop synergistic capabilities that can be transferred to rivals. 
E)  All of these. 
A)  shareholder value in ways that shareholders cannot undertake by simply owning a portfolio of stocks in companies in different industries. 
B)  shareholder value by eliminating the opportunity for weak performing firms to survive. 
C)  firms that struggle to attain economies of scale and scope to a heightened level of effectiveness. 
D)  firms that develop synergistic capabilities that can be transferred to rivals. 
E)  All of these.

Question 10

When identifying a diversified company's present corporate strategy,which of the following would NOT be something to look for?

Accepted Answer

A)  Recent moves to build positions in new industries. 
B)  The company's approach to allocating investment capital and resources across its present businesses. 
C)  Recent management actions to strengthen the company's positions in existing businesses. 
D)  Recent moves to divest weak or unattractive business units. 
E)  Actions over the past few years to substitute global strategies for multi-country strategies in one or more business units. 
A)  Recent moves to build positions in new industries. 
B)  The company's approach to allocating investment capital and resources across its present businesses. 
C)  Recent management actions to strengthen the company's positions in existing businesses. 
D)  Recent moves to divest weak or unattractive business units. 
E)  Actions over the past few years to substitute global strategies for multi-country strategies in one or more business units.

Question 11

Which one of the following is NOT a good candidate for divestiture in a corporate restructuring effort?

Accepted Answer

A)  Business units that lack strategic fit with the businesses to be retained. 
B)  Weak performers. 
C)  Businesses in unattractive industries. 
D)  Businesses that are cash hogs or that lack other types of resource fit. 
E)  Businesses compatible with the company's revised diversification strategy. 
A)  Business units that lack strategic fit with the businesses to be retained. 
B)  Weak performers. 
C)  Businesses in unattractive industries. 
D)  Businesses that are cash hogs or that lack other types of resource fit. 
E)  Businesses compatible with the company's revised diversification strategy.

Question 12

The options for allocating a diversified company's financial resources include:

Accepted Answer

A)  making acquisitions to establish positions in new businesses or to complement existing businesses. 
B)  investing in ways to strengthen or grow existing businesses. 
C)  funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. 
D)  paying off existing debt,increasing dividends,building cash reserves,or repurchasing shares of the company's stock. 
E)  All of these. 
A)  making acquisitions to establish positions in new businesses or to complement existing businesses. 
B)  investing in ways to strengthen or grow existing businesses. 
C)  funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. 
D)  paying off existing debt,increasing dividends,building cash reserves,or repurchasing shares of the company's stock. 
E)  All of these.

Question 13

A joint venture is an attractive way for a company to enter a new industry when:

Accepted Answer

A)  the pool of attractive acquisition candidates in the target industry is relatively small. 
B)  it needs better access to economies of scope in order to be cost-competitive. 
C)  the industry is growing slowly and adding too much capacity too soon could create oversupply conditions. 
D)  the firm has no prior experience with diversification and the industry is on the verge of explosive growth. 
E)  the opportunity is too risky or complex for a company to pursue alone,a company lacks some important resources or competencies and needs a partner to supply them,and/or a company needs a local partner in order to enter a desirable business in a foreign country. 
A)  the pool of attractive acquisition candidates in the target industry is relatively small. 
B)  it needs better access to economies of scope in order to be cost-competitive. 
C)  the industry is growing slowly and adding too much capacity too soon could create oversupply conditions. 
D)  the firm has no prior experience with diversification and the industry is on the verge of explosive growth. 
E)  the opportunity is too risky or complex for a company to pursue alone,a company lacks some important resources or competencies and needs a partner to supply them,and/or a company needs a local partner in order to enter a desirable business in a foreign country.

Question 14

Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed,what are the four main strategic paths it can employ to improve the performance of its overall business lineup?

Accepted Answer

The answer of Once a company has diversified into a...

Question 15

Carefully explain the difference between and the rationale for selecting a strategy of related diversification and/or a strategy of unrelated diversification

Accepted Answer

The answer of Carefully explain the difference between and the...

Question 16

Evaluating a diversified company's corporate strategy and critiquing the pluses and minuses of its business lineup involves

Accepted Answer

A)  using a SWOT analysis of each industry in which the firm has a business interest. 
B)  applying the cost-of-entry test,the better-off test,the profitability test,and the shareholder value test to each business and industry represented in the company's business portfolio. 
C)  evaluating the strategic fits and resource fits among the various sister businesses and deciding what priority to give each of the company's business units in allocating resources. 
D)  looking at each industry/business to determine how many profitable strategic groups the company has diversified into. 
E)  determining how many of the business units are following focus strategies,differentiation strategies,best-cost provider strategies,and low-cost leadership strategies. 
A)  using a SWOT analysis of each industry in which the firm has a business interest. 
B)  applying the cost-of-entry test,the better-off test,the profitability test,and the shareholder value test to each business and industry represented in the company's business portfolio. 
C)  evaluating the strategic fits and resource fits among the various sister businesses and deciding what priority to give each of the company's business units in allocating resources. 
D)  looking at each industry/business to determine how many profitable strategic groups the company has diversified into. 
E)  determining how many of the business units are following focus strategies,differentiation strategies,best-cost provider strategies,and low-cost leadership strategies.

Question 17

For a diversified company to be a strong performer:

Accepted Answer

A)  a substantial portion of its revenues and expenses must come from business units with relatively low attractiveness scores. 
B)  its principal business must be in industries with a good outlook for growth and above-average profitability. 
C)  business units in high attractiveness score industries should be candidates for divesture. 
D)  they must operate within the favorable aspects of their industry environment. 
E)  All of these. 
A)  a substantial portion of its revenues and expenses must come from business units with relatively low attractiveness scores. 
B)  its principal business must be in industries with a good outlook for growth and above-average profitability. 
C)  business units in high attractiveness score industries should be candidates for divesture. 
D)  they must operate within the favorable aspects of their industry environment. 
E)  All of these.

Question 18

Which is the better approach to diversification-a strategy of related diversification or a strategy of unrelated diversification? Explain and support your answer.

Accepted Answer

The answer of Which is the better approach to diversification-a...

Question 19

Identify and briefly discuss each of the three options for entering new businesses.What are the driving choice parameters for entry into new businesses and which one is the most popular in the sense of being used most frequently?

Accepted Answer

The answer of Identify and briefly discuss each of the...

Question 20

Calculating quantitative attractiveness ratings for the industries a company has diversified into involves:

Accepted Answer

A)  determining each industry's key success factors,calculating the ability of the company to be successful on each industry KSF,and obtaining overall measures of the firm's ability to compete successfully in each of its industries based on the combined KSF ratings. 
B)  determining each industry's competitive advantage factors,calculating the ability of the company to be successful on each competitive advantage factor,and obtaining overall measures of the firm's ability to achieve sustainable competitive advantage in each of its industries based on the combined competitive advantage factor ratings. 
C)  selecting a set of industry attractiveness measures,weighting the importance of each measure,rating each industry on each attractiveness measure,multiplying the industry ratings by the assigned weight to obtain a weighted rating,adding the weighted ratings for each industry to obtain an overall industry attractiveness score,and using the overall industry attractiveness scores to interpret the attractiveness of all the industries,both individually and as a group. 
D)  rating the attractiveness of each industry's strategic and resource fits,summing the attractiveness scores,and determining whether the overall scores for the industries as a group are appealing or not. 
E)  identifying each industry's average profitability,rating the difficulty of achieving average profitability in each industry,and deciding whether the company's prospects for above-average profitability are attractive or unattractive,industry by industry. 
A)  determining each industry's key success factors,calculating the ability of the company to be successful on each industry KSF,and obtaining overall measures of the firm's ability to compete successfully in each of its industries based on the combined KSF ratings. 
B)  determining each industry's competitive advantage factors,calculating the ability of the company to be successful on each competitive advantage factor,and obtaining overall measures of the firm's ability to achieve sustainable competitive advantage in each of its industries based on the combined competitive advantage factor ratings. 
C)  selecting a set of industry attractiveness measures,weighting the importance of each measure,rating each industry on each attractiveness measure,multiplying the industry ratings by the assigned weight to obtain a weighted rating,adding the weighted ratings for each industry to obtain an overall industry attractiveness score,and using the overall industry attractiveness scores to interpret the attractiveness of all the industries,both individually and as a group. 
D)  rating the attractiveness of each industry's strategic and resource fits,summing the attractiveness scores,and determining whether the overall scores for the industries as a group are appealing or not. 
E)  identifying each industry's average profitability,rating the difficulty of achieving average profitability in each industry,and deciding whether the company's prospects for above-average profitability are attractive or unattractive,industry by industry.

Generally internal development of a new business has appeal,except when:

Shareholder interests are generally best served by concentrating corporate resources on businesses that can contend for market leadership.True or false? Explain your answer.

A "cash cow" type of business:

Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of the parts-an outcome known as:

Which of the following is NOT one of the appeals of related diversification?

The attractiveness test is the most important test for determining whether diversification into a new business is likely to result in 1 + 1 = 3 increases in shareholder value (as opposed to simply a 1 + 1 = 2 type of increase).True or false? Justify and explain your answer.

Besides financial cash flow considerations,there are two other factors to consider in assessing whether a diversified company's businesses exhibit good financial fit,namely:

Assessments of the long-term attractiveness of each industry represented in a diversified company's lineup of businesses should be based on:

Capturing cross-business strategic fit benefits via a strategy of related diversification builds:

When identifying a diversified company's present corporate strategy,which of the following would NOT be something to look for?

Which one of the following is NOT a good candidate for divestiture in a corporate restructuring effort?

The options for allocating a diversified company's financial resources include:

A joint venture is an attractive way for a company to enter a new industry when:

Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed,what are the four main strategic paths it can employ to improve the performance of its overall business lineup?

Carefully explain the difference between and the rationale for selecting a strategy of related diversification and/or a strategy of unrelated diversification

Evaluating a diversified company's corporate strategy and critiquing the pluses and minuses of its business lineup involves

For a diversified company to be a strong performer:

Which is the better approach to diversification-a strategy of related diversification or a strategy of unrelated diversification? Explain and support your answer.

Identify and briefly discuss each of the three options for entering new businesses.What are the driving choice parameters for entry into new businesses and which one is the most popular in the sense of being used most frequently?

Calculating quantitative attractiveness ratings for the industries a company has diversified into involves:

What Is Strategy and Why Is It Important

Charting a Companys Direction: Its Vision, Mission, Objectives, and Strategy

Evaluating a Companys External Environment

Evaluating a Companys Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies: Which One to Employ

Strengthening a Companys Competitive Position: Strategic Moves, Timing, and Scope of Operations

Strategies for Competing in International Markets

Ethics, corporate Social Responsibility, Environmental Sustainability, and Strategy

Building an Organization Capable of Good Strategy Execution: People, Capabilities, and Structure

Managing Internal Operations: Actions That Promote Good Strategy Execution

Corporate Culture and Leadership: Keys to Good Strategy Execution

Filters

Exam 8: Corporate Strategy: Diversification and the Multibusiness Company

Generally internal development of a new business has appeal,except when:

Shareholder interests are generally best served by concentrating corporate resources on businesses that can contend for market leadership.True or false? Explain your answer.

A "cash cow" type of business:

Creating added value for shareholders via diversification requires building a multibusiness company where the whole is greater than the sum of the parts-an outcome known as:

Which of the following is NOT one of the appeals of related diversification?

The attractiveness test is the most important test for determining whether diversification into a new business is likely to result in 1 + 1 = 3 increases in shareholder value (as opposed to simply a 1 + 1 = 2 type of increase).True or false? Justify and explain your answer.

Besides financial cash flow considerations,there are two other factors to consider in assessing whether a diversified company's businesses exhibit good financial fit,namely:

Assessments of the long-term attractiveness of each industry represented in a diversified company's lineup of businesses should be based on:

Capturing cross-business strategic fit benefits via a strategy of related diversification builds:

When identifying a diversified company's present corporate strategy,which of the following would NOT be something to look for?

Which one of the following is NOT a good candidate for divestiture in a corporate restructuring effort?

The options for allocating a diversified company's financial resources include:

A joint venture is an attractive way for a company to enter a new industry when:

Once a company has diversified into a collection of related or unrelated businesses and concludes that some strategy adjustments are needed,what are the four main strategic paths it can employ to improve the performance of its overall business lineup?

Carefully explain the difference between and the rationale for selecting a strategy of related diversification and/or a strategy of unrelated diversification

Evaluating a diversified company's corporate strategy and critiquing the pluses and minuses of its business lineup involves

For a diversified company to be a strong performer:

Which is the better approach to diversification-a strategy of related diversification or a strategy of unrelated diversification? Explain and support your answer.

Identify and briefly discuss each of the three options for entering new businesses.What are the driving choice parameters for entry into new businesses and which one is the most popular in the sense of being used most frequently?

Calculating quantitative attractiveness ratings for the industries a company has diversified into involves:

What Is Strategy and Why Is It Important

Charting a Companys Direction: Its Vision, Mission, Objectives, and Strategy

Evaluating a Companys External Environment

Evaluating a Companys Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies: Which One to Employ

Strengthening a Companys Competitive Position: Strategic Moves, Timing, and Scope of Operations

Strategies for Competing in International Markets

Ethics, corporate Social Responsibility, Environmental Sustainability, and Strategy

Building an Organization Capable of Good Strategy Execution: People, Capabilities, and Structure

Managing Internal Operations: Actions That Promote Good Strategy Execution

Corporate Culture and Leadership: Keys to Good Strategy Execution

Filters