Question 1

Which one of the following is NOT a reasonable option for deploying a diversified company's financial resources?

Accepted Answer

A)  Making acquisitions to establish positions in new businesses or to complement existing businesses. 
B)  Investing financial resources in cash cow businesses until they show enough strength to generate positive cash flows. 
C)  Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. 
D)  Paying down existing debt,increasing dividends,or repurchasing shares of the company's stock. 
E)  Investing in ways to strengthen or grow existing businesses. 
A)  Making acquisitions to establish positions in new businesses or to complement existing businesses. 
B)  Investing financial resources in cash cow businesses until they show enough strength to generate positive cash flows. 
C)  Funding long-range R&D ventures aimed at opening market opportunities in new or existing businesses. 
D)  Paying down existing debt,increasing dividends,or repurchasing shares of the company's stock. 
E)  Investing in ways to strengthen or grow existing businesses.

Question 2

Which one of the following is NOT part of the task of checking a diversified company's business lineup for adequate resource fit?

Accepted Answer

A)  Determining whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses. 
B)  Determining whether recently acquired businesses are acting to strengthen a company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thinly across its businesses. 
C)  Determining whether some business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another. 
D)  Determining whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating. 
E)  Determining whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into. 
A)  Determining whether the excess cash flows generated by cash cow businesses are sufficient to cover the negative cash flows of its cash hog businesses. 
B)  Determining whether recently acquired businesses are acting to strengthen a company's resource base and competitive capabilities or whether they are causing its competitive and managerial resources to be stretched too thinly across its businesses. 
C)  Determining whether some business units have value chain match-ups that offer opportunities to transfer skills or technology or intellectual capital from one business to another. 
D)  Determining whether the company has adequate financial strength to fund its different businesses and maintain a healthy credit rating. 
E)  Determining whether the corporate parent has or can develop sufficient resource strengths and competitive capabilities to be successful in each of the businesses it has diversified into.

Question 3

Businesses are said to be "related" when:

Accepted Answer

A)  they have several key suppliers and several key customers in common. 
B)  their value chains have the same number of primary activities. 
C)  their products are both sold through retailers. 
D)  their value chains possess competitively valuable cross-business relationships that present opportunities to transfer resources from one business to another,combine similar activities and reduce costs,share use of a well-known brand name,and/or create mutually useful resource strengths and capabilities. 
E)  many consumers buy the products/services of both businesses. 
A)  they have several key suppliers and several key customers in common. 
B)  their value chains have the same number of primary activities. 
C)  their products are both sold through retailers. 
D)  their value chains possess competitively valuable cross-business relationships that present opportunities to transfer resources from one business to another,combine similar activities and reduce costs,share use of a well-known brand name,and/or create mutually useful resource strengths and capabilities. 
E)  many consumers buy the products/services of both businesses.

Question 4

Strategic fit between two or more businesses exists when one or more activities comprising their respective value chains present opportunities:

Accepted Answer

A)  to prevent the transfer expertise or technology or capabilities from one business to another. 
B)  to independently preserve common brand names from cross-business usage. 
C)  to increase costs by combining the performance of the related value chain activities of different businesses. 
D)  for cross-business collaboration to build valuable new resource strengths and competitive capabilities. 
E)  maintain business value chain activities separate and apart from one business to another to protect company independence. 
A)  to prevent the transfer expertise or technology or capabilities from one business to another. 
B)  to independently preserve common brand names from cross-business usage. 
C)  to increase costs by combining the performance of the related value chain activities of different businesses. 
D)  for cross-business collaboration to build valuable new resource strengths and competitive capabilities. 
E)  maintain business value chain activities separate and apart from one business to another to protect company independence.

Question 5

Strategies to restructure a diversified company's business lineup involve:

Accepted Answer

A)  revamping the value chains of each of a diversified company's businesses. 
B)  focusing on restoring the profitability of its money-losing businesses and thereby improving the company's overall profitability. 
C)  revamping the strategies of its different businesses,especially those that are performing poorly. 
D)  divesting low-performing businesses that do not fit and acquiring new ones where opportunities are more promising to put a new face on the company's business makeup. 
E)  broadening the scope of diversification to include a larger number of smaller and more diverse businesses. 
A)  revamping the value chains of each of a diversified company's businesses. 
B)  focusing on restoring the profitability of its money-losing businesses and thereby improving the company's overall profitability. 
C)  revamping the strategies of its different businesses,especially those that are performing poorly. 
D)  divesting low-performing businesses that do not fit and acquiring new ones where opportunities are more promising to put a new face on the company's business makeup. 
E)  broadening the scope of diversification to include a larger number of smaller and more diverse businesses.

Question 6

The chief purpose of calculating quantitative industry attractiveness scores for each industry a company has diversified into is to:

Accepted Answer

A)  determine which industry is the biggest and fastest growing. 
B)  get in position to rank the industries from most competitive to least competitive. 
C)  provide a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into,both individually and as a group,and further to provide an indication of which industries offer the best and worst long-term prospects. 
D)  ascertain which industries have the easiest-to-achieve key success factors. 
E)  rank the attractiveness of the various industry value chains from best to worst. 
A)  determine which industry is the biggest and fastest growing. 
B)  get in position to rank the industries from most competitive to least competitive. 
C)  provide a basis for drawing analysis-based conclusions about the attractiveness of the industries a company has diversified into,both individually and as a group,and further to provide an indication of which industries offer the best and worst long-term prospects. 
D)  ascertain which industries have the easiest-to-achieve key success factors. 
E)  rank the attractiveness of the various industry value chains from best to worst.

Question 7

There is ample room for companies to customize their diversification strategies and be defined as being either narrowly or broadly diversified,and when combination related-unrelated diversification strategy options are adopted,they have particular appeal to:

Accepted Answer

A)  those companies with a mix of valuable competitive assets,covering the spectrum from generalized to specialized resources and capabilities. 
B)  those large multibusiness firms,sometimes called conglomerates,because they have a unique capability designed to stabilize earnings. 
C)  companies with a portfolio of product choices for buyer-related behavior. 
D)  corporate managers who wish to reduce risks and increase revenues. 
E)  All of these. 
A)  those companies with a mix of valuable competitive assets,covering the spectrum from generalized to specialized resources and capabilities. 
B)  those large multibusiness firms,sometimes called conglomerates,because they have a unique capability designed to stabilize earnings. 
C)  companies with a portfolio of product choices for buyer-related behavior. 
D)  corporate managers who wish to reduce risks and increase revenues. 
E)  All of these.

Question 8

Under what circumstances might a diversified firm choose to divest one of its businesses?

Accepted Answer

The answer of Under what circumstances might a diversified firm...

Question 9

A diversified company's business units exhibit good resource fit when:

Accepted Answer

A)  each business is a cash cow. 
B)  its businesses add to a company's overall resource strengths and have matching resource requirements and/or when the parent has adequate corporate resources to support its business needs and add value. 
C)  each business is sufficiently profitable to generate an attractive return on invested capital. 
D)  each business unit produces large internal cash flows over and above what is needed to build and maintain the business. 
E)  the resource requirements of each business exactly match the company's available resources. 
A)  each business is a cash cow. 
B)  its businesses add to a company's overall resource strengths and have matching resource requirements and/or when the parent has adequate corporate resources to support its business needs and add value. 
C)  each business is sufficiently profitable to generate an attractive return on invested capital. 
D)  each business unit produces large internal cash flows over and above what is needed to build and maintain the business. 
E)  the resource requirements of each business exactly match the company's available resources.

Question 10

When speed is of the essence,firms should use an acquisition entry strategy because:

Accepted Answer

A)  it is the fastest mode of entry. 
B)  in rapidly changing industries fast movers can secure long-term positioning advantages. 
C)  early movers can gain experienced-based advantages that grow ever larger over time. 
D)  of the importance of establishing an industry standard. 
E)  All of these. 
A)  it is the fastest mode of entry. 
B)  in rapidly changing industries fast movers can secure long-term positioning advantages. 
C)  early movers can gain experienced-based advantages that grow ever larger over time. 
D)  of the importance of establishing an industry standard. 
E)  All of these.

Question 11

The option of sticking with the current business lineup makes sense when:

Accepted Answer

A)  the company's present portfolio of businesses offers attractive growth opportunities and can be counted on to create economic value for shareholders. 
B)  companies are seeking multinational diversification. 
C)  corporate executives are excited about market opportunities. 
D)  circumstances warrant maintaining the line-up until market values change for the better. 
E)  divesting some businesses and retrenching to a narrower diversification base. 
A)  the company's present portfolio of businesses offers attractive growth opportunities and can be counted on to create economic value for shareholders. 
B)  companies are seeking multinational diversification. 
C)  corporate executives are excited about market opportunities. 
D)  circumstances warrant maintaining the line-up until market values change for the better. 
E)  divesting some businesses and retrenching to a narrower diversification base.

Question 12

Calculating quantitative competitive strength ratings for each of a diversified company's business units involves:

Accepted Answer

A)  determining each industry's key success factors,rating the ability of each business to be successful on each industry KSF,and adding the individual ratings to obtain overall measures of each business's ability to compete successfully. 
B)  identifying the competitive forces facing each business,rating the strength of these competitive forces industry by industry,and then ranking each business's ability to be profitable,given the strength of the competition it faces. 
C)  selecting a set of competitive strength measures,weighting the importance of each measure,rating each business on each strength measure,multiplying the strength ratings by the assigned weight to obtain a weighted rating,adding the weighted ratings for each business unit to obtain an overall competitive strength score,and using the overall competitive strength scores to evaluate the competitive strength of all the businesses,both individually and as a group. 
D)  determining which businesses possess good strategic fit with other businesses,identifying the portion of the value chain where this fit occurs,and evaluating the strength of the competitive advantage attached to each of the strategic fits to get an overall measure of competitive advantage potential.Businesses with the highest/lowest competitive advantage potential have the most/least competitive strength. 
E)  rating the caliber of each businesses strategic and resource fit,weighting the importance of each type of strategic/resource fit,calculating weighted strategic/resource fit scores,and adding the weighted ratings for each business to obtain an overall strength score for each business unit that indicates whether the company has adequate strategic/resource fits to be a strong market contender in each of the industries where it competes. 
A)  determining each industry's key success factors,rating the ability of each business to be successful on each industry KSF,and adding the individual ratings to obtain overall measures of each business's ability to compete successfully. 
B)  identifying the competitive forces facing each business,rating the strength of these competitive forces industry by industry,and then ranking each business's ability to be profitable,given the strength of the competition it faces. 
C)  selecting a set of competitive strength measures,weighting the importance of each measure,rating each business on each strength measure,multiplying the strength ratings by the assigned weight to obtain a weighted rating,adding the weighted ratings for each business unit to obtain an overall competitive strength score,and using the overall competitive strength scores to evaluate the competitive strength of all the businesses,both individually and as a group. 
D)  determining which businesses possess good strategic fit with other businesses,identifying the portion of the value chain where this fit occurs,and evaluating the strength of the competitive advantage attached to each of the strategic fits to get an overall measure of competitive advantage potential.Businesses with the highest/lowest competitive advantage potential have the most/least competitive strength. 
E)  rating the caliber of each businesses strategic and resource fit,weighting the importance of each type of strategic/resource fit,calculating weighted strategic/resource fit scores,and adding the weighted ratings for each business to obtain an overall strength score for each business unit that indicates whether the company has adequate strategic/resource fits to be a strong market contender in each of the industries where it competes.

Question 13

Which one of the following is NOT an important aspect of evaluating the merits of a diversified company's strategy?

Accepted Answer

A)  Assessing the competitive strength of each business the company has diversified into. 
B)  Determining which business units are cash cows and which ones are cash hogs,and then evaluating how soon the company's cash hogs can be transformed into cash cows. 
C)  Evaluating the strategic fits and resource fits among the various sister businesses. 
D)  Assessing the attractiveness of the industries the company has diversified into,both individually and as a group. 
E)  Ranking the performance prospects of the businesses from best to worst and deciding what priority to give each of the company's business units in allocating resources. 
A)  Assessing the competitive strength of each business the company has diversified into. 
B)  Determining which business units are cash cows and which ones are cash hogs,and then evaluating how soon the company's cash hogs can be transformed into cash cows. 
C)  Evaluating the strategic fits and resource fits among the various sister businesses. 
D)  Assessing the attractiveness of the industries the company has diversified into,both individually and as a group. 
E)  Ranking the performance prospects of the businesses from best to worst and deciding what priority to give each of the company's business units in allocating resources.

Question 14

One of the most significant contributions to strategy making in diversified companies that the nine-cell industry attractiveness competitive strength matrix provides is:

Accepted Answer

A)  identifying which businesses have strategies that should be continued,which businesses have strategies that need fine-tuning,and which businesses have strategies that need a major overhaul. 
B)  that businesses having the greatest competitive strength and that are positioned in the most attractive industries should have the highest priority for corporate resource allocation and that competitively weak businesses in relatively unattractive industries should have the lowest priority and perhaps even be considered for divestiture. 
C)  pinpointing which strategies are most appropriate for businesses positioned in the four corners of the matrix (although the matrix reveals little about the best strategies for businesses positioned in the remainder of the matrix). 
D)  its ability to pinpoint what kind of competitive advantage or disadvantage each business has. 
E)  pinpointing which businesses to keep and which ones to divest. 
A)  identifying which businesses have strategies that should be continued,which businesses have strategies that need fine-tuning,and which businesses have strategies that need a major overhaul. 
B)  that businesses having the greatest competitive strength and that are positioned in the most attractive industries should have the highest priority for corporate resource allocation and that competitively weak businesses in relatively unattractive industries should have the lowest priority and perhaps even be considered for divestiture. 
C)  pinpointing which strategies are most appropriate for businesses positioned in the four corners of the matrix (although the matrix reveals little about the best strategies for businesses positioned in the remainder of the matrix). 
D)  its ability to pinpoint what kind of competitive advantage or disadvantage each business has. 
E)  pinpointing which businesses to keep and which ones to divest.

Which one of the following is NOT a reasonable option for deploying a diversified company's financial resources?

Which one of the following is NOT part of the task of checking a diversified company's business lineup for adequate resource fit?

Businesses are said to be "related" when:

Strategic fit between two or more businesses exists when one or more activities comprising their respective value chains present opportunities:

Strategies to restructure a diversified company's business lineup involve:

The chief purpose of calculating quantitative industry attractiveness scores for each industry a company has diversified into is to:

There is ample room for companies to customize their diversification strategies and be defined as being either narrowly or broadly diversified,and when combination related-unrelated diversification strategy options are adopted,they have particular appeal to:

Under what circumstances might a diversified firm choose to divest one of its businesses?

A diversified company's business units exhibit good resource fit when:

When speed is of the essence,firms should use an acquisition entry strategy because:

The option of sticking with the current business lineup makes sense when:

Calculating quantitative competitive strength ratings for each of a diversified company's business units involves:

Which one of the following is NOT an important aspect of evaluating the merits of a diversified company's strategy?

One of the most significant contributions to strategy making in diversified companies that the nine-cell industry attractiveness competitive strength matrix provides is:

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

Which one of the following is NOT a reasonable option for deploying a diversified company's financial resources?

Which one of the following is NOT part of the task of checking a diversified company's business lineup for adequate resource fit?

Businesses are said to be "related" when:

Strategic fit between two or more businesses exists when one or more activities comprising their respective value chains present opportunities:

Strategies to restructure a diversified company's business lineup involve:

The chief purpose of calculating quantitative industry attractiveness scores for each industry a company has diversified into is to:

There is ample room for companies to customize their diversification strategies and be defined as being either narrowly or broadly diversified,and when combination related-unrelated diversification strategy options are adopted,they have particular appeal to:

Under what circumstances might a diversified firm choose to divest one of its businesses?

A diversified company's business units exhibit good resource fit when:

When speed is of the essence,firms should use an acquisition entry strategy because:

The option of sticking with the current business lineup makes sense when:

Calculating quantitative competitive strength ratings for each of a diversified company's business units involves:

Which one of the following is NOT an important aspect of evaluating the merits of a diversified company's strategy?

One of the most significant contributions to strategy making in diversified companies that the nine-cell industry attractiveness competitive strength matrix provides is:

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