Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

New ventures:

Accepted Answer

A) should be killed if they don't make a profit within three years. 
B) are often preferred by technology-based companies. 
C) are preferred compared to acquisitions when entry barriers are high. 
D) are less risky than acquisitions. 
E) are best when the company is entering the industry on a small scale. 
A) should be killed if they don't make a profit within three years. 
B) are often preferred by technology-based companies. 
C) are preferred compared to acquisitions when entry barriers are high. 
D) are less risky than acquisitions. 
E) are best when the company is entering the industry on a small scale.

Question 3

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 4

Companies 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 5

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 6

Which of the following seems to be a major determinant of a new venture's success?

Accepted Answer

A) Large-scale entry into the target industry designed to build market share, even when such entry involves significant short-term losses 
B) Cautious small-scale entry into the target industry so that the company can assess the probable outcome of the venture without losing too much money 
C) A low level of integration between the marketing and the research and development functions of the venturing company 
D) Supporting many new venture projects in the hope that one will succeed 
E) Killing the new venture if it does not show a profit after the end of the third year 
A) Large-scale entry into the target industry designed to build market share, even when such entry involves significant short-term losses 
B) Cautious small-scale entry into the target industry so that the company can assess the probable outcome of the venture without losing too much money 
C) A low level of integration between the marketing and the research and development functions of the venturing company 
D) Supporting many new venture projects in the hope that one will succeed 
E) Killing the new venture if it does not show a profit after the end of the third year

Question 7

At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined together to create a complete meal.This is an example of diversification.

Accepted Answer

A) True 
 B)False

Question 8

What is perhaps the most important reason why acquisitions made by a company fail?

Accepted Answer

A) The expense of the acquisition 
B) The timing of the acquisition 
C) Management's unwillingness to expend the necessary effort to make the acquisition work effectively 
D) Incompetence on the part of workers in the acquired finn 
E) Difficulties in coordinating manufacturing activities 
A) The expense of the acquisition 
B) The timing of the acquisition 
C) Management's unwillingness to expend the necessary effort to make the acquisition work effectively 
D) Incompetence on the part of workers in the acquired finn 
E) Difficulties in coordinating manufacturing activities

Question 9

Free cash flow is defined as:

Accepted Answer

A) money in a company's bank account. 
B) government funds given to a company for meeting Environmental Protection Agency (EP
A)  regulations. 
C) additional funds donated by stockholders. 
D) cash in excess of that required to fund investments in the company's industry and to meet any debt commitments. 
E) cash borrowed by the company that requires no interest payments. 
A) money in a company's bank account. 
B) government funds given to a company for meeting Environmental Protection Agency (EP
A)  regulations. 
C) additional funds donated by stockholders. 
D) cash in excess of that required to fund investments in the company's industry and to meet any debt commitments. 
E) cash borrowed by the company that requires no interest payments.

Question 10

Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

Accepted Answer

Diversification is the process of enteri

Question 11

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 the 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 the 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 12

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

Accepted Answer

A) A technology acquisition strategy 
B) Related diversification 
C) A restructuring strategy 
D) Total diversification 
E) A taper diversification strategy 
A) A technology acquisition strategy 
B) Related diversification 
C) A restructuring strategy 
D) Total diversification 
E) A taper diversification strategy

Question 13

Economies of scope can be defmed as:

Accepted Answer

A) competencies that result from the skills of a company's top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company. 
B) some kind of skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers. 
C) the process of taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry. 
D) the process of taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit in a different industry. 
E) the synergies that arise when one or more of a diversified company's business units are able to lower costs or increase differentiation because they can more effectively pool, share, and utilize expensive resources or capabilities. 
A) competencies that result from the skills of a company's top managers that help every business unit within a company perform at a higher level than it could if it operated as a separate or independent company. 
B) some kind of skill or competency that when shared by two or more business units allows them to operate more effectively and create more value for customers. 
C) the process of taking a distinctive competency developed by a business unit in one industry and implanting it in a business unit operating in another industry. 
D) the process of taking a distinctive competency developed by a business unit in one industry and using it to create a new business unit in a different industry. 
E) the synergies that arise when one or more of a diversified company's business units are able to lower costs or increase differentiation because they can more effectively pool, share, and utilize expensive resources or capabilities.

Question 14

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 finn-specific conditions 
C) Diversification for pooling risks 
D) Decreasing bureaucratic costs 
E) Greater differentiation of products 
A) Steady industry conditions 
B) Varying finn-specific conditions 
C) Diversification for pooling risks 
D) Decreasing bureaucratic costs 
E) Greater differentiation of products

Question 15

If a company generates free cash flow, that money technically belongs to shareholders.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is false?

Accepted Answer

A) Joint ventures are preferable to acquisitions when the new business is related to the existing business. 
B) Acquisitions are preferable to new ventures when speed is important. 
C) Joint ventures are generally preferable to acquisitions when entry barriers are high. 
D) Acquisitions can be both a reason for corporate decline and part of a turnaround strategy. 
E) New ventures are preferable to acquisitions in the embryonic stage of the industry life cycle. 
A) Joint ventures are preferable to acquisitions when the new business is related to the existing business. 
B) Acquisitions are preferable to new ventures when speed is important. 
C) Joint ventures are generally preferable to acquisitions when entry barriers are high. 
D) Acquisitions can be both a reason for corporate decline and part of a turnaround strategy. 
E) New ventures are preferable to acquisitions in the embryonic stage of the industry life cycle.

Question 17

New ventures are likely to be preferred compared to acquisitions when:

Accepted Answer

A) entry barriers are high. 
B) exit barriers are high. 
C) a company's business model is based on using its technology to innovate new kinds of products for related markets. 
D) it needs to move fast to establish a presence in an industry, commonly an embryonic or growth industry. 
E) the company must make the huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry. 
A) entry barriers are high. 
B) exit barriers are high. 
C) a company's business model is based on using its technology to innovate new kinds of products for related markets. 
D) it needs to move fast to establish a presence in an industry, commonly an embryonic or growth industry. 
E) the company must make the huge investment necessary to develop the set of value-chain activities required to make and sell products in the new industry.

Question 18

A laundromat and a pool hall together invest in a new store, where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

To be commercially successful, new products must be developed with in mind.

Accepted Answer

A) manufacturing requirements 
B) engineering technology 
C) customer requirements 
D) sales techniques 
E) technical requirements 
A) manufacturing requirements 
B) engineering technology 
C) customer requirements 
D) sales techniques 
E) technical requirements

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

New ventures:

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

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are to their existing business 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.

Which of the following seems to be a major determinant of a new venture's success?

At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined together to create a complete meal.This is an example of diversification.

What is perhaps the most important reason why acquisitions made by a company fail?

Free cash flow is defined as:

Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

General organizational competencies are found:

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

Economies of scope can be defmed as:

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

If a company generates free cash flow, that money technically belongs to shareholders.

Which of the following statements is false?

New ventures are likely to be preferred compared to acquisitions when:

A laundromat and a pool hall together invest in a new store, where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

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

To be commercially successful, new products must be developed with in mind.

Strategic Leadership: Managing the Strategy-Making Process for Competitive Analysis

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

Filters

Exam 10: Corporate-Level Strategy: Related and Unrelated Diversification

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

New ventures:

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

Companies that base their diversification strategy on transferring competencies tend to acquire new businesses that are to their existing business 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.

Which of the following seems to be a major determinant of a new venture's success?

At Burger King, multiple items such as a cheeseburger, french fries, and a drink are combined together to create a complete meal.This is an example of diversification.

What is perhaps the most important reason why acquisitions made by a company fail?

Free cash flow is defined as:

Identify and discuss the profitability justifications for pursuing a multibusiness model based on diversification.

General organizational competencies are found:

Which diversification strategy is based on the idea that the company creates value by applying the distinctive competencies it developed in one line of business to another business activity?

Economies of scope can be defmed as:

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

If a company generates free cash flow, that money technically belongs to shareholders.

Which of the following statements is false?

New ventures are likely to be preferred compared to acquisitions when:

A laundromat and a pool hall together invest in a new store, where customers can wash their clothes and play pool while waiting.This is an example of an internal new venture.

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

To be commercially successful, new products must be developed with in mind.

Strategic Leadership: Managing the Strategy-Making Process for Competitive Analysis

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Distinctive Competencies, Competitive Advantage, and Profitability

Building Competitive Advantage Through Functional-Level Strategy

Building Competitive Advantage Through 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 in Companies That Compete in a Single Industry

Implementing Strategy in Companies That Compete Across Industries and Countries

Filters