Question 1

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 or when a 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)  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 or when a company lacks some important resources or competencies and needs a partner to supply them.

Question 2

The most important strategy-making guidance that comes from drawing a nine-cell industry attractiveness-competitive strength matrix is

Accepted Answer

A)  which businesses in the portfolio have the most potential for strategic fit and resource fit. 
B)  why cash cow businesses are more valuable than cash hog businesses. 
C)  that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture. 
D)  which businesses have the biggest competitive advantages and which ones confront serious competitive disadvantages. 
E)  which businesses are in industries with profitable value chains and which are in industries with money-losing value chains. 
A)  which businesses in the portfolio have the most potential for strategic fit and resource fit. 
B)  why cash cow businesses are more valuable than cash hog businesses. 
C)  that corporate resources should be concentrated on those businesses enjoying both a higher degree of industry attractiveness and competitive strength and that businesses having low competitive strength in relatively unattractive industries should be looked at for possible divestiture. 
D)  which businesses have the biggest competitive advantages and which ones confront serious competitive disadvantages. 
E)  which businesses are in industries with profitable value chains and which are in industries with money-losing value chains.

Question 3

In a diversified company,the competitive advantage potential of cross-business strategic fit is greater when

Accepted Answer

A)  the business lineup includes a number of cash cows. 
B)  valuable opportunities exist to transfer skills,technology,or intellectual capital from one business to another,combine the performance of related activities,or share the use of a well-respected brand name across multiple products or service categories. 
C)  the strategy maps of the various business units converge. 
D)  businesses included in the corporate portfolio compete in fast-growing industries. 
E)  competition is less intense and driving forces are relatively weak. 
A)  the business lineup includes a number of cash cows. 
B)  valuable opportunities exist to transfer skills,technology,or intellectual capital from one business to another,combine the performance of related activities,or share the use of a well-respected brand name across multiple products or service categories. 
C)  the strategy maps of the various business units converge. 
D)  businesses included in the corporate portfolio compete in fast-growing industries. 
E)  competition is less intense and driving forces are relatively weak.

Question 4

Identify and briefly discuss each of the three tests for determining whether diversification into a new business is likely to build shareholder value.

Accepted Answer

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

Question 5

Diversifying into new businesses can be considered a success only if it

Accepted Answer

A)  results in increased profit margins and bigger total profits. 
B)  builds shareholder value. 
C)  helps a company escape the rigors of competition in its present business. 
D)  leads to the development of a greater variety of distinctive competencies and competitive capabilities. 
E)  helps the company overcome the barriers to entering additional foreign markets. 
A)  results in increased profit margins and bigger total profits. 
B)  builds shareholder value. 
C)  helps a company escape the rigors of competition in its present business. 
D)  leads to the development of a greater variety of distinctive competencies and competitive capabilities. 
E)  helps the company overcome the barriers to entering additional foreign markets.

Question 6

What is meant by the term "resource fit" as it applies to evaluating a diversified company's business lineup?

Accepted Answer

The answer of What is meant by the term "resource...

Question 7

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

Accepted Answer

A)  their value chains possess competitively valuable cross-business 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 productions methods that they employ both entail economies of scale. 
A)  their value chains possess competitively valuable cross-business 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 productions methods that they employ both entail economies of scale.

Question 8

Which of the following is a diversified business with one major "core" business and a collection of small related or unrelated businesses?

Accepted Answer

A)  Broadly diversified enterprise 
B)  Narrowly diversified enterprise 
C)  Multibusiness enterprise 
D)  High-compensation/low-risk enterprise 
E)  Dominant business enterprise 
A)  Broadly diversified enterprise 
B)  Narrowly diversified enterprise 
C)  Multibusiness enterprise 
D)  High-compensation/low-risk enterprise 
E)  Dominant business enterprise

Question 9

Corporate restructuring strategies

Accepted Answer

A)  involve making radical changes in a diversified company's business lineup,divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup. 
B)  entail reducing the scope of diversification to a smaller number of businesses. 
C)  entail selling off marginal businesses to free resources for redeployment to the remaining businesses. 
D)  focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. 
E)  focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability. 
A)  involve making radical changes in a diversified company's business lineup,divesting some businesses and acquiring new ones so as to put a new face on the company's business lineup. 
B)  entail reducing the scope of diversification to a smaller number of businesses. 
C)  entail selling off marginal businesses to free resources for redeployment to the remaining businesses. 
D)  focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability. 
E)  focus on broadening the scope of diversification to include a larger number of businesses and boost the company's growth and profitability.

Question 10

What makes related diversification an attractive strategy is

Accepted Answer

A)  the ability to broaden the company's product line. 
B)  the opportunity to convert the competitive advantage potential into 1 + 1 = 3 gains in shareholder value. 
C)  the potential for improving the stability of the company's financial performance. 
D)  the ability to serve a broader spectrum of buyer needs. 
E)  the added capability it provides in overcoming the barriers to entering foreign markets. 
A)  the ability to broaden the company's product line. 
B)  the opportunity to convert the competitive advantage potential into 1 + 1 = 3 gains in shareholder value. 
C)  the potential for improving the stability of the company's financial performance. 
D)  the ability to serve a broader spectrum of buyer needs. 
E)  the added capability it provides in overcoming the barriers to entering foreign markets.

Question 11

Under what circumstances might an already diversified company chose to pursue corporate restructuring?

Accepted Answer

An already diversified company might cho

Question 12

Diversifying into a new industry by forming a new internal subsidiary to enter and compete in the target industry is attractive when

Accepted Answer

A)  all of the potential acquisition candidates are losing money. 
B)  it is impractical to outsource most of the value chain activities that have to be performed in the target business/industry. 
C)  there is ample time to launch the new business from the ground up. 
D)  the company has built up a hoard of cash with which to finance a diversification effort. 
E)  none of the companies already in the industry are attractive strategic alliance partners. 
A)  all of the potential acquisition candidates are losing money. 
B)  it is impractical to outsource most of the value chain activities that have to be performed in the target business/industry. 
C)  there is ample time to launch the new business from the ground up. 
D)  the company has built up a hoard of cash with which to finance a diversification effort. 
E)  none of the companies already in the industry are attractive strategic alliance partners.

Question 13

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 14

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)  All of these. 
E)  None of these;the best and quickest ways to divest a business are either to close it or else just walk away and give the keys to creditors. 
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)  All of these. 
E)  None of these;the best and quickest ways to divest a business are either to close it or else just walk away and give the keys to creditors.

Question 15

The difference between a "cash cow" business and a "cash hog" business is that

Accepted Answer

A)  a cash cow business is making money whereas a cash hog business is losing money. 
B)  a cash cow business generates enough profits to pay off long-term debt whereas a cash hog business does not. 
C)  a cash cow business generates positive retained earnings whereas a cash hog business produces negative retained earnings. 
D)  a cash cow business produces large internal cash flows over and above what is needed to build and maintain the business whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements. 
E)  a cash cow business generates very large increases in sales revenues whereas a cash hog business has declining sales revenues and chronic deficiencies of working capital. 
A)  a cash cow business is making money whereas a cash hog business is losing money. 
B)  a cash cow business generates enough profits to pay off long-term debt whereas a cash hog business does not. 
C)  a cash cow business generates positive retained earnings whereas a cash hog business produces negative retained earnings. 
D)  a cash cow business produces large internal cash flows over and above what is needed to build and maintain the business whereas the internal cash flows of a cash hog business are too small to fully fund its operating needs and capital requirements. 
E)  a cash cow business generates very large increases in sales revenues whereas a cash hog business has declining sales revenues and chronic deficiencies of working capital.

Question 16

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

Accepted Answer

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

Question 17

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

Accepted Answer

A)  a 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)  it 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)  it has not built up a hoard of cash with which to finance a diversification effort. 
A)  a 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)  it 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)  it has not built up a hoard of cash with which to finance a diversification effort.

Question 18

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 19

One strategic fit-based approach to related diversification would be to

Accepted Answer

A)  diversify into new industries that present opportunities to combine value chain activities of two or more businesses to lower costs. 
B)  diversify into those industries where the same kinds of driving forces and competitive forces prevail,thus allowing use of much the same competitive strategy in all of the businesses a company is in. 
C)  acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups. 
D)  acquire companies in forward distribution channels (wholesalers and/or retailers). 
E)  expand into foreign markets where the firm currently does no business. 
A)  diversify into new industries that present opportunities to combine value chain activities of two or more businesses to lower costs. 
B)  diversify into those industries where the same kinds of driving forces and competitive forces prevail,thus allowing use of much the same competitive strategy in all of the businesses a company is in. 
C)  acquire rival firms that have broader product lines so as to give the company access to a wider range of buyer groups. 
D)  acquire companies in forward distribution channels (wholesalers and/or retailers). 
E)  expand into foreign markets where the firm currently does no business.

Question 20

In analyzing the nine-cell matrix,those businesses in the three cells in the lower right corner of the matrix

Accepted Answer

A)  are typically weak performers and have the lowest claim on corporate resources. 
B)  typically are prime candidates for divesture. 
C)  are destined for squeezing out the maximum cash flows. 
D)  typically have dimmer profit outlooks than those in the middle with medium resource priority. 
E)  All of these. 
A)  are typically weak performers and have the lowest claim on corporate resources. 
B)  typically are prime candidates for divesture. 
C)  are destined for squeezing out the maximum cash flows. 
D)  typically have dimmer profit outlooks than those in the middle with medium resource priority. 
E)  All of these.

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

The most important strategy-making guidance that comes from drawing a nine-cell industry attractiveness-competitive strength matrix is

In a diversified company,the competitive advantage potential of cross-business strategic fit is greater when

Identify and briefly discuss each of the three tests for determining whether diversification into a new business is likely to build shareholder value.

Diversifying into new businesses can be considered a success only if it

What is meant by the term "resource fit" as it applies to evaluating a diversified company's business lineup?

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

Which of the following is a diversified business with one major "core" business and a collection of small related or unrelated businesses?

Corporate restructuring strategies

What makes related diversification an attractive strategy is

Under what circumstances might an already diversified company chose to pursue corporate restructuring?

Diversifying into a new industry by forming a new internal subsidiary to enter and compete in the target industry is attractive when

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

Divestiture can be accomplished by

The difference between a "cash cow" business and a "cash hog" business is that

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

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

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

One strategic fit-based approach to related diversification would be to

In analyzing the nine-cell matrix,those businesses in the three cells in the lower right corner of the matrix

Strategy, Business Models, and Competitive Advantage

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

Evaluating a Companys External Environment

Evaluating a Companys Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies

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

Superior Strategy Execution-Another Path to Competitive Advantage

Filters

Exam 8: Corporate Strategy: Diversification and the Multibusiness Company

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

The most important strategy-making guidance that comes from drawing a nine-cell industry attractiveness-competitive strength matrix is

In a diversified company,the competitive advantage potential of cross-business strategic fit is greater when

Identify and briefly discuss each of the three tests for determining whether diversification into a new business is likely to build shareholder value.

Diversifying into new businesses can be considered a success only if it

What is meant by the term "resource fit" as it applies to evaluating a diversified company's business lineup?

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

Which of the following is a diversified business with one major "core" business and a collection of small related or unrelated businesses?

Corporate restructuring strategies

What makes related diversification an attractive strategy is

Under what circumstances might an already diversified company chose to pursue corporate restructuring?

Diversifying into a new industry by forming a new internal subsidiary to enter and compete in the target industry is attractive when

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

Divestiture can be accomplished by

The difference between a "cash cow" business and a "cash hog" business is that

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

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

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

One strategic fit-based approach to related diversification would be to

In analyzing the nine-cell matrix,those businesses in the three cells in the lower right corner of the matrix

Strategy, Business Models, and Competitive Advantage

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

Evaluating a Companys External Environment

Evaluating a Companys Resources, Capabilities, and Competitiveness

The Five Generic Competitive Strategies

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

Superior Strategy Execution-Another Path to Competitive Advantage

Filters