Question 1

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance.

Accepted Answer

A)  unrelated level of diversification 
B)  single-business level of diversification 
C)  dominant-business level of diversification 
D)  related-linked diversification 
A)  unrelated level of diversification 
B)  single-business level of diversification 
C)  dominant-business level of diversification 
D)  related-linked diversification D

Question 2

_____ is when a firm moves activities and jobs outside its home country.

Accepted Answer

A)  Conglomerate outsourcing 
B)  Alliance outsourcing 
C)  Off-shore outsourcing 
D)  External outsourcing 
A)  Conglomerate outsourcing 
B)  Alliance outsourcing 
C)  Off-shore outsourcing 
D)  External outsourcing C

Question 3

Vehmo Inc.is an automobile company whose core competency lies in manufacturing petrol- and diesel-based cars.The company realizes that more of its potential customers are switching to electric cars.The R&D department of the company acquires competencies in developing electric cars and launches its first hybrid car.In this scenario,Vehmo is primarily

Accepted Answer

A)  leveraging new core competencies to improve current market position. 
B)  redeploying existing core competencies to compete in future markets. 
C)  unlearning existing core competencies to create and compete in markets of the future. 
D)  building new core competencies to protect and extend current market position. 
A)  leveraging new core competencies to improve current market position. 
B)  redeploying existing core competencies to compete in future markets. 
C)  unlearning existing core competencies to create and compete in markets of the future. 
D)  building new core competencies to protect and extend current market position. D

Question 4

ESB Group is the parent company of many related businesses under its banner.Each share of the parent company is quoted at $220.However,if this had to be assessed by adding the stock prices of each of its strategic business units,the value would only be $200 per share.In this scenario,what has ESB Group created?

Accepted Answer

A)  capital liquidity 
B)  diversification premium 
C)  diversification discount 
D)  demand-pull inflation 
A)  capital liquidity 
B)  diversification premium 
C)  diversification discount 
D)  demand-pull inflation

Question 5

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a

Accepted Answer

A)  diversification discount. 
B)  diversification premium. 
C)  conglomerate discount. 
D)  conglomerate premium. 
A)  diversification discount. 
B)  diversification premium. 
C)  conglomerate discount. 
D)  conglomerate premium.

Question 6

How do firms benefit from vertical integration?

Accepted Answer

A)  Vertical integration allows firms to reduce organizational complexity and administrative costs. 
B)  Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. 
C)  Firms that vertically integrate do not have to make transaction-specific investments. 
D)  Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities. 
A)  Vertical integration allows firms to reduce organizational complexity and administrative costs. 
B)  Firms that vertically integrate will have increased strategic flexibility when faced with technological changes. 
C)  Firms that vertically integrate do not have to make transaction-specific investments. 
D)  Vertical integration allows firms to increase operational efficiencies through improved coordination of adjacent value chain activities.

Question 7

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.

Accepted Answer

A)  Lean manufacturing 
B)  Licensing 
C)  Crowdsourcing 
D)  Bootlegging 
A)  Lean manufacturing 
B)  Licensing 
C)  Crowdsourcing 
D)  Bootlegging

Question 8

Which of the following companies will be considered as a conglomerate?

Accepted Answer

A)  ExxonMobil, after it acquired XTO Energy-a natural gas company 
B)  The Tata Group, active in industries such as tea, steel, IT, power, and automobiles 
C)  Harley-Davidson, with its Harley-Davidson branded motorcycle clothing and attire 
D)  Coca-Cola, which solely focuses on soft drinks but operates in many countries 
A)  ExxonMobil, after it acquired XTO Energy-a natural gas company 
B)  The Tata Group, active in industries such as tea, steel, IT, power, and automobiles 
C)  Harley-Davidson, with its Harley-Davidson branded motorcycle clothing and attire 
D)  Coca-Cola, which solely focuses on soft drinks but operates in many countries

Question 9

Neon Electronics Inc.sourced touch screens required for its tablet computers,cell phones,and televisions from a manufacturer in China.But the demand for such components was high globally,and the supplier could not meet the quality standards of Neon Electronics.Thus,Neon Electronics decided to set up its own unit to develop and manufacture the required touch screens.What does this scenario best illustrate?

Accepted Answer

A)  crowdsourcing 
B)  new product development 
C)  backward vertical integration 
D)  conglomerate diversification 
A)  crowdsourcing 
B)  new product development 
C)  backward vertical integration 
D)  conglomerate diversification

Question 10

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers.In a similar fashion,another firm sells its products through company-owned retail outlets and through independent retailers.Both of these examples demonstrate

Accepted Answer

A)  strategic outsourcing. 
B)  strategic insourcing. 
C)  backward horizontal integration. 
D)  taper integration. 
A)  strategic outsourcing. 
B)  strategic insourcing. 
C)  backward horizontal integration. 
D)  taper integration.

Question 11

Which of the following best illustrates site specificity?

Accepted Answer

A)  equipment necessary for mining bauxite and aluminum smelting 
B)  bottling machinery to manufacture bottles with trademarked shapes 
C)  investment made in human capital to master procedures of a specific organization 
D)  investment made to train employees to operate computers 
A)  equipment necessary for mining bauxite and aluminum smelting 
B)  bottling machinery to manufacture bottles with trademarked shapes 
C)  investment made in human capital to master procedures of a specific organization 
D)  investment made to train employees to operate computers

Question 12

Fantastica Industries,a U.S.-based large conglomerate,competes in the hospitality,education,telecommunications,entertainment,airlines,and chemical industries.It currently operates in about 30 nations,and is planning to expand its portfolio by investing in rapidly developing countries.Which of the following strategies is Fantastica Industries pursuing?

Accepted Answer

A)  zone pricing 
B)  niche marketing 
C)  product-market diversification strategy 
D)  process diversification strategy 
A)  zone pricing 
B)  niche marketing 
C)  product-market diversification strategy 
D)  process diversification strategy

Question 13

The core competency of MotorCraft Inc.is its fuel-efficient engine found in its cars.These engines are developed and built in-house.The company realizes that there is a new market opportunity to diversify.Thus,it produces the car engines on a large scale and sells them to other automobile companies.In this scenario,MotorCraft is

Accepted Answer

A)  leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. 
B)  redeploying and recombining existing core competencies to compete in future markets. 
C)  building new core competencies to create and compete in future markets. 
D)  building new core competencies to protect and extend current market position. 
A)  leveraging existing core competencies to target the chasm between the early adopter and early majority market segment. 
B)  redeploying and recombining existing core competencies to compete in future markets. 
C)  building new core competencies to create and compete in future markets. 
D)  building new core competencies to protect and extend current market position.

Question 14

_____,which are incurred when pursuing a related-diversification strategy,are a function of the number,size,and types of businesses that are linked to one another.

Accepted Answer

A)  Coordination costs 
B)  Fixed costs 
C)  Agency costs 
D)  Network costs 
A)  Coordination costs 
B)  Fixed costs 
C)  Agency costs 
D)  Network costs

Question 15

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources,it can be concluded that the firm is using

Accepted Answer

A)  related-constrained diversification. 
B)  related-linked diversification. 
C)  strategic outsourcing. 
D)  offshore outsourcing. 
A)  related-constrained diversification. 
B)  related-linked diversification. 
C)  strategic outsourcing. 
D)  offshore outsourcing.

Question 16

Win Goods Inc.is a large multinational conglomerate.As a single business unit,the company's stock price is estimated to be $200.However,by adding the actual market stock prices of each of its individual business units,the stock price of the company as one unit would be $300.What is Win Goods experiencing in this scenario?

Accepted Answer

A)  diversification discount 
B)  learning-curve effects 
C)  experience-curve effects 
D)  economies of scale 
A)  diversification discount 
B)  learning-curve effects 
C)  experience-curve effects 
D)  economies of scale

Question 17

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

Accepted Answer

A)  level of diversification. 
B)  geographic scope. 
C)  vertical integration. 
D)  absorptive capacity. 
A)  level of diversification. 
B)  geographic scope. 
C)  vertical integration. 
D)  absorptive capacity.

Question 18

Companies that pursue related diversification are able to create a diversification premium because they

Accepted Answer

A)  are able to leverage time compression economies. 
B)  can operate beyond the minimum efficient scale. 
C)  are able to increase value due to economies of scope. 
D)  can reduce the value gap created by its products. 
A)  are able to leverage time compression economies. 
B)  can operate beyond the minimum efficient scale. 
C)  are able to increase value due to economies of scope. 
D)  can reduce the value gap created by its products.

Question 19

How does a conglomerate benefit from following an unrelated diversification strategy?

Accepted Answer

A)  The conglomerate can solely depend on its primary business activity for a major portion of its revenues. 
B)  The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. 
C)  The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. 
D)  The conglomerate can limit the learning- and experience-curve effects it faces. 
A)  The conglomerate can solely depend on its primary business activity for a major portion of its revenues. 
B)  The conglomerate can share most of its competencies in products, services, technology, or distribution between all its businesses. 
C)  The conglomerate can overcome institutional weaknesses, such as a lack of capital markets, in emerging economies. 
D)  The conglomerate can limit the learning- and experience-curve effects it faces.

Question 20

Which of the following motivations for business growth involves principal-agent problems?

Accepted Answer

A)  increasing profits 
B)  increasing market power 
C)  reducing risk 
D)  motivating managers 
A)  increasing profits 
B)  increasing market power 
C)  reducing risk 
D)  motivating managers

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance.

_____ is when a firm moves activities and jobs outside its home country.

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a

How do firms benefit from vertical integration?

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.

Which of the following companies will be considered as a conglomerate?

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers.In a similar fashion,another firm sells its products through company-owned retail outlets and through independent retailers.Both of these examples demonstrate

Which of the following best illustrates site specificity?

_____,which are incurred when pursuing a related-diversification strategy,are a function of the number,size,and types of businesses that are linked to one another.

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources,it can be concluded that the firm is using

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

Companies that pursue related diversification are able to create a diversification premium because they

How does a conglomerate benefit from following an unrelated diversification strategy?

Which of the following motivations for business growth involves principal-agent problems?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation and Entrepreneurship

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters

Exam 8: Corporate Strategy: Vertical Integration and Diversification

A strategy of _____ will be most beneficial for a firm to enhance its overall corporate performance.

_____ is when a firm moves activities and jobs outside its home country.

Companies that pursue related diversification are more likely to improve their performance than companies that pursue unrelated diversification because they create a

How do firms benefit from vertical integration?

_____ is best described as a form of long-term contracting in the manufacturing sector that enables firms to commercialize intellectual property.

Which of the following companies will be considered as a conglomerate?

A firm sources intermediate goods and components from in-house suppliers as well as outside suppliers.In a similar fashion,another firm sells its products through company-owned retail outlets and through independent retailers.Both of these examples demonstrate

Which of the following best illustrates site specificity?

_____,which are incurred when pursuing a related-diversification strategy,are a function of the number,size,and types of businesses that are linked to one another.

When executives of a firm consider business opportunities only where they can leverage their existing competencies and resources,it can be concluded that the firm is using

Decisions relating to "what stages of the industry value chain to participate in" determine a firm's

Companies that pursue related diversification are able to create a diversification premium because they

How does a conglomerate benefit from following an unrelated diversification strategy?

Which of the following motivations for business growth involves principal-agent problems?

What Is Strategy

Strategic Leadership: Managing the Strategy Process

External Analysis: Industry Structure, Competitive Forces, and Strategic Groups

Internal Analysis: Resources, Capabilities, and Core Competencies

Competitive Advantage, Firm Performance, and Business Models

Business Strategy: Differentiation, Cost Leadership, and Blue Oceans

Business Strategy: Innovation and Entrepreneurship

Corporate Strategy: Strategic Alliances, Mergers and Acquisitions

Global Strategy: Competing Around the World

Organizational Design: Structure, Culture, and Control

Corporate Governance and Business Ethics

Filters