Question 1

The success of unrelated diversification is contingent upon management's ability to

Accepted Answer

A)  acquire new businesses that utilize much the same technology as existing businesses. 
B)  divest businesses whose competitive strategies do not match the overall competitive strategy of the corporation. 
C)  acquire new businesses having attractive distribution-related and customer-related strategic fits with existing businesses. 
D)  identify bargain-priced companies with big upside potential and then turn around their operations quickly with the aid of the parent company's financial resources and managerial know-how. 
E)  identify potential new acquisition candidates that are cash cows (as opposed to cash hogs). 
A)  acquire new businesses that utilize much the same technology as existing businesses. 
B)  divest businesses whose competitive strategies do not match the overall competitive strategy of the corporation. 
C)  acquire new businesses having attractive distribution-related and customer-related strategic fits with existing businesses. 
D)  identify bargain-priced companies with big upside potential and then turn around their operations quickly with the aid of the parent company's financial resources and managerial know-how. 
E)  identify potential new acquisition candidates that are cash cows (as opposed to cash hogs).

Question 2

Divestiture can be accomplished by

Accepted Answer

A)  selling a business outright. 
B)  spinning the unwanted business off as a managerially and financially independent company by selling shares to the investing public via an initial public offering of stock. 
C)  spinning the unwanted business off as a managerially and financially independent company by distributing shares in the new company to existing shareholders of the parent company. 
D)  spinning the unwanted business off as a financially and managerially independent company. 
E)  All of these choices are correct. 
A)  selling a business outright. 
B)  spinning the unwanted business off as a managerially and financially independent company by selling shares to the investing public via an initial public offering of stock. 
C)  spinning the unwanted business off as a managerially and financially independent company by distributing shares in the new company to existing shareholders of the parent company. 
D)  spinning the unwanted business off as a financially and managerially independent company. 
E)  All of these choices are correct.

Question 3

What is meant by the term strategic fit? What are the advantages of pursuing strategic fit in choosing which industries to diversify into?

Accepted Answer

Strategic fit refers to the alignment be

Question 4

Checking a diversified firm's business portfolio for the competitive advantage potential of cross-business strategic fits entails consideration of

Accepted Answer

A)  whether the parent company's competitive advantages are being deployed to maximum advantage in each of its business units. 
B)  whether the competitive strategies employed in each business act to reinforce the competitive power of the strategies employed in the company's other businesses. 
C)  whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy. 
D)  the extent to which there are competitively valuable relationships between the value chains of sister business units and what opportunities they present to reduce costs,share use of a potent brand name,or transfer skills or technology or intellectual capital from one business to another. 
E)  how compatible the competitive strategies of the various sister businesses are and whether these strategies are properly aimed at achieving the same kind of competitive advantage. 
A)  whether the parent company's competitive advantages are being deployed to maximum advantage in each of its business units. 
B)  whether the competitive strategies employed in each business act to reinforce the competitive power of the strategies employed in the company's other businesses. 
C)  whether the competitive strategies in each business possess good strategic fit with the parent company's corporate strategy. 
D)  the extent to which there are competitively valuable relationships between the value chains of sister business units and what opportunities they present to reduce costs,share use of a potent brand name,or transfer skills or technology or intellectual capital from one business to another. 
E)  how compatible the competitive strategies of the various sister businesses are and whether these strategies are properly aimed at achieving the same kind of competitive advantage.

Question 5

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because

Accepted Answer

A)  it has resources or capabilities that are eminently transferable to other related or complementary businesses. 
B)  the company's growth is sluggish,and it needs the sales and profit boost that a new business can provide. 
C)  management wants to lessen the company's vulnerability to seasonal or recessionary influences. 
D)  unfavorable driving forces face the company's core business. 
E)  All of these choices are correct. 
A)  it has resources or capabilities that are eminently transferable to other related or complementary businesses. 
B)  the company's growth is sluggish,and it needs the sales and profit boost that a new business can provide. 
C)  management wants to lessen the company's vulnerability to seasonal or recessionary influences. 
D)  unfavorable driving forces face the company's core business. 
E)  All of these choices are correct.

Question 6

Under what circumstances might an already diversified company choose to pursue corporate restructuring:

Accepted Answer

The answer of Under what circumstances might an already diversified...

Question 7

The cost-of-entry test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether

Accepted Answer

A)  a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another. 
B)  the cost to enter the target industry will strain the company's credit rating. 
C)  a company's costs to enter the target industry are so high that the potentials for good profitability and return on investment are eroded. 
D)  the cost to enter the target industry will raise or lower the company's total profits. 
E)  the cost a company incurs to enter the target industry will raise or lower production costs. 
A)  a newly entered business presents opportunities to cost-efficiently transfer competitively valuable skills or technology from one business to another. 
B)  the cost to enter the target industry will strain the company's credit rating. 
C)  a company's costs to enter the target industry are so high that the potentials for good profitability and return on investment are eroded. 
D)  the cost to enter the target industry will raise or lower the company's total profits. 
E)  the cost a company incurs to enter the target industry will raise or lower production costs.

Question 8

Identify and briefly describe the six steps involved in evaluating a diversified company's business lineup and diversification strategy.

Accepted Answer

The answer of Identify and briefly describe the six steps...

Question 9

One of the suggested advantages of an unrelated diversification strategy is that it

Accepted Answer

A)  expands a firm's competitive advantage opportunities to include a wider array of businesses. 
B)  spreads the stockholders' risks across a group of truly diverse businesses. 
C)  increases strategic fit opportunities and the potential for a 1 + 1 = 3 outcome on the bottom line. 
D)  results in having more cash cow businesses than cash hog businesses. 
E)  facilitates capturing the financial fits among sister businesses (as compared to a strategy of related diversification). 
A)  expands a firm's competitive advantage opportunities to include a wider array of businesses. 
B)  spreads the stockholders' risks across a group of truly diverse businesses. 
C)  increases strategic fit opportunities and the potential for a 1 + 1 = 3 outcome on the bottom line. 
D)  results in having more cash cow businesses than cash hog businesses. 
E)  facilitates capturing the financial fits among sister businesses (as compared to a strategy of related diversification).

Question 10

Opportunities for cross-business strategic fit exist

Accepted Answer

A)  in R&D and technology activities only. 
B)  in supply chain activities only. 
C)  in sales and marketing activities only. 
D)  in production and distribution activities only. 
E)  anywhere along the respective value chains of related businesses; no one place is best. 
A)  in R&D and technology activities only. 
B)  in supply chain activities only. 
C)  in sales and marketing activities only. 
D)  in production and distribution activities only. 
E)  anywhere along the respective value chains of related businesses; no one place is best.

Question 11

The strategic options to improve a diversified company's overall performance do not include which of the following categories of actions?

Accepted Answer

A)  broadening the company's business scope by making new acquisitions in new industries 
B)  increasing dividend payments to shareholders and/or repurchasing shares of the company's stock 
C)  restructuring the company's business lineup and putting a whole new face on the company's business makeup 
D)  sticking closely with the existing business lineup and pursuing opportunities these businesses present 
E)  divesting weak-performing businesses and retrenching to a narrower base of business operations 
A)  broadening the company's business scope by making new acquisitions in new industries 
B)  increasing dividend payments to shareholders and/or repurchasing shares of the company's stock 
C)  restructuring the company's business lineup and putting a whole new face on the company's business makeup 
D)  sticking closely with the existing business lineup and pursuing opportunities these businesses present 
E)  divesting weak-performing businesses and retrenching to a narrower base of business operations

Question 12

Which of the following is an important appeal of a related diversification strategy?

Accepted Answer

A)  It represents an effective way of capturing valuable financial fit benefits. 
B)  It offers opportunities to transfer skills,expertise,technical know-how,or other capabilities from one business to another. 
C)  It offers significant opportunities to strongly differentiate a company's product offerings from those of rivals. 
D)  It is more likely to pass the cost-of-entry test and the capital gains test than unrelated diversification. 
E)  It is typically more profitable than unrelated diversification,which is a major factor in helping related diversification pass the attractiveness test. 
A)  It represents an effective way of capturing valuable financial fit benefits. 
B)  It offers opportunities to transfer skills,expertise,technical know-how,or other capabilities from one business to another. 
C)  It offers significant opportunities to strongly differentiate a company's product offerings from those of rivals. 
D)  It is more likely to pass the cost-of-entry test and the capital gains test than unrelated diversification. 
E)  It is typically more profitable than unrelated diversification,which is a major factor in helping related diversification pass the attractiveness test.

Question 13

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

Accepted Answer

A)  the firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps. 
B)  the firm needs access to economies of scope and good financial fits in order to be cost-competitive. 
C)  it is uneconomical for the firm to achieve economies of scope on its own initiative. 
D)  the firm has no prior experience with diversification. 
E)  the firm has not built up a hoard of cash with which to finance a diversification effort. 
A)  the firm is missing some essential skills or capabilities or resources and needs a partner to supply the missing expertise and competencies or fill the resource gaps. 
B)  the firm needs access to economies of scope and good financial fits in order to be cost-competitive. 
C)  it is uneconomical for the firm to achieve economies of scope on its own initiative. 
D)  the firm has no prior experience with diversification. 
E)  the firm has not built up a hoard of cash with which to finance a diversification effort.

Question 14

The essential requirement for different businesses to be "related" is that

Accepted Answer

A)  their value chains possess competitively valuable cross-business fit relationships. 
B)  the products of the different businesses are bought by much the same types of buyers. 
C)  the products of the different businesses are sold in the same types of retail stores. 
D)  the businesses have several key suppliers in common. 
E)  the production methods that they employ both entail economies of scale. 
A)  their value chains possess competitively valuable cross-business fit relationships. 
B)  the products of the different businesses are bought by much the same types of buyers. 
C)  the products of the different businesses are sold in the same types of retail stores. 
D)  the businesses have several key suppliers in common. 
E)  the production methods that they employ both entail economies of scale.

Question 15

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 16

One important dimension of resource fit concerns the potential to generate internal cash flows sufficient to fund capital requirements of its business lineup,termed the firm's

Accepted Answer

A)  internal capital market. 
B)  debt policy management. 
C)  liquidity management. 
D)  economic value added. 
E)  All of these choices are correct. 
A)  internal capital market. 
B)  debt policy management. 
C)  liquidity management. 
D)  economic value added. 
E)  All of these choices are correct.

Question 17

Explain the difference between a cash cow business and a cash hog business.

Accepted Answer

The answer of Explain the difference between a cash cow...

Question 18

Discuss the pros and cons of a strategy of unrelated diversification.

Accepted Answer

The answer of Discuss the pros and cons of a...

Question 19

Under what circumstances might an already diversified company chose to enter additional businesses and broaden its diversification base?

Accepted Answer

There are several circumstances under wh

Question 20

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)  the firm 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 the company to pursue alone or when the company lacks some important resources or competencies and needs a partner to supply them. 
A)  the pool of attractive acquisition candidates in the target industry is relatively small. 
B)  the firm 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 the company to pursue alone or when the company lacks some important resources or competencies and needs a partner to supply them.

The success of unrelated diversification is contingent upon management's ability to

Divestiture can be accomplished by

What is meant by the term strategic fit? What are the advantages of pursuing strategic fit in choosing which industries to diversify into?

Checking a diversified firm's business portfolio for the competitive advantage potential of cross-business strategic fits entails consideration of

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because

Under what circumstances might an already diversified company choose to pursue corporate restructuring:

The cost-of-entry test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether

Identify and briefly describe the six steps involved in evaluating a diversified company's business lineup and diversification strategy.

One of the suggested advantages of an unrelated diversification strategy is that it

Opportunities for cross-business strategic fit exist

The strategic options to improve a diversified company's overall performance do not include which of the following categories of actions?

Which of the following is an important appeal of a related diversification strategy?

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

The essential requirement for different businesses to be "related" is that

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.

One important dimension of resource fit concerns the potential to generate internal cash flows sufficient to fund capital requirements of its business lineup,termed the firm's

Explain the difference between a cash cow business and a cash hog business.

Discuss the pros and cons of a strategy of unrelated diversification.

Under what circumstances might an already diversified company chose to enter additional businesses and broaden its diversification base?

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

Strategy,Business Models, and Competitive Advantage

Strategy Formulation, Execution, and Governance

Evaluating a Companys External Environment

Evaluating a Company Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies

Strength-Ending a Company Competitive Position: Strategic Moves, Timing, and Scope of Operations

Strategies for Competing in International Markets

Ethics,Corporate Social Responsibility,Environmental Sustainability, and Strategy

Super Strategy Execution-Another Path to Competitive Advantage

Filters

Exam 8: Corporate Strategy: Diversification and the Multi-Business Company

The success of unrelated diversification is contingent upon management's ability to

Divestiture can be accomplished by

What is meant by the term strategic fit? What are the advantages of pursuing strategic fit in choosing which industries to diversify into?

Checking a diversified firm's business portfolio for the competitive advantage potential of cross-business strategic fits entails consideration of

A company that is already diversified may choose to broaden its business base by building positions in new related or unrelated businesses because

Under what circumstances might an already diversified company choose to pursue corporate restructuring:

The cost-of-entry test for evaluating whether diversification into a particular industry is likely to build shareholder value involves determining whether

Identify and briefly describe the six steps involved in evaluating a diversified company's business lineup and diversification strategy.

One of the suggested advantages of an unrelated diversification strategy is that it

Opportunities for cross-business strategic fit exist

The strategic options to improve a diversified company's overall performance do not include which of the following categories of actions?

Which of the following is an important appeal of a related diversification strategy?

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

The essential requirement for different businesses to be "related" is that

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.

One important dimension of resource fit concerns the potential to generate internal cash flows sufficient to fund capital requirements of its business lineup,termed the firm's

Explain the difference between a cash cow business and a cash hog business.

Discuss the pros and cons of a strategy of unrelated diversification.

Under what circumstances might an already diversified company chose to enter additional businesses and broaden its diversification base?

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

Strategy,Business Models, and Competitive Advantage

Strategy Formulation, Execution, and Governance

Evaluating a Companys External Environment

Evaluating a Company Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies

Strength-Ending a Company Competitive Position: Strategic Moves, Timing, and Scope of Operations

Strategies for Competing in International Markets

Ethics,Corporate Social Responsibility,Environmental Sustainability, and Strategy

Super Strategy Execution-Another Path to Competitive Advantage

Filters