Question 1

Options exist when the owner of the option has

Accepted Answer

A)  the obligation, but not the right to engage in a transaction. 
B)  the right, but not the obligation to engage in a transaction. 
C)  the right and obligation to engage in a transaction. 
D)  neither the right nor the obligation to engage in a transaction.

Question 2

Vertical integration is attractive when

Accepted Answer

A)  transaction costs are higher than internal administrative costs. 
B)  internal administrative costs are higher than transaction costs. 
C)  transaction costs and internal administrative costs are equal. 
D)  search costs are higher than monitoring costs.

Question 3

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with

Accepted Answer

A)  strategic alliances. 
B)  divestment. 
C)  vertical integration. 
D)  horizontal integration.

Question 4

Which of the following tests considers the potential for synergy as advantage emerges for a new business because of its association with another company?

Accepted Answer

A)  The just-like-me test 
B)  The attractiveness test 
C)  The cost-of-entry test 
D)  The better-off test

Question 5

Explain the meaning of consistency as it applies to the evaluation of a corporate strategy.

Accepted Answer

The answer of Explain the meaning of consistency as it...

Question 6

The downsides or limitations of mergers and acquisitions include all of the following, except

Accepted Answer

A)  expensive premiums that are frequently paid to acquire a business. 
B)  difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations. 
C)  it is a slow means to enter new markets and acquire skills and competences. 
D)  there can be many cultural issues that can doom an otherwise promising acquisition.

Question 7

Molson, Inc. of Montreal and Adolph Coors Co. of Golden, Colorado merged their operations in order to stand up to the

Accepted Answer

A)  continued diversification in the beverage market. 
B)  competition from Japan. 
C)  continuing consolidation in the global beer industry. 
D)  substantial cash outlays to maintain market share.

Question 8

Transaction costs include all of the following costs, except

Accepted Answer

A)  search costs. 
B)  negotiating costs. 
C)  monitoring costs. 
D)  agency costs.

Question 9

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Accepted Answer

A) True 
 B)False

Question 10

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

Accepted Answer

A) True 
 B)False

Question 11

What are the primary benefits associated with related diversification?

Accepted Answer

The answer of What are the primary benefits associated with...

Question 12

Loblaw Companies Limited, with a strong presence in Ontario and western Canada, gained a footprint into the Quebec market by

Accepted Answer

A)  establishing a clear understanding between partners. 
B)  acquiring Provigo. 
C)  not shortchanging your partner. 
D)  working hard to ensure a collaborative relationship between partners.

Question 13

_______ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.

Accepted Answer

A)  Parenting 
B)  Restructuring 
C)  Leveraging core competencies 
D)  Sharing activities

Question 14

According to the text, Canfor Corporation of Vancouver is a good example from the forest industry of having followed a successful strategy, to expand across markets, of

Accepted Answer

A)  capital restructuring and technology restructuring. 
B)  asset restructuring. 
C)  horizontal integration. 
D)  vertical integration.

Question 15

A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.

Accepted Answer

A) True 
 B)False

Question 16

In terms of strategy evaluation, which of the following terms refers to the capacity of the firm to achieve what it is embarking on?

Accepted Answer

A)  Consistency 
B)  Consonance 
C)  Advantage 
D)  Feasibility

Question 17

Which of the following statements regarding internal development as a means of diversification is ?

Accepted Answer

A)  Many companies use internal development to extend their product lines or add to their service offerings. 
B)  An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. 
C)  The firm is able to capture the wealth created without having to 'share the wealth' with alliance partners. 
D)  Firms can develop products or services at a lower cost if they rely on their own resources instead of external funding.

Question 18

When Rogers acquired Microcell, the clients of Fido, Microcell's brand name

Accepted Answer

A)  costs and associated expenses increased with expanded overhead and capital expenditures. 
B)  instantly gained broader market coverage and better reception for their phones. 
C)  problems developed with unbalanced capacities along the value chain. 
D)  additional administrative costs associated with managing a more complex set of activities increased.

Question 19

Explain the limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

Accepted Answer

The answer of Explain the limitations of portfolio management matrices...

Question 20

Which two related issues are addressed with a corporate-level strategy?

Accepted Answer

A)  How to compete in a given business; the application of technology. 
B)  What businesses to compete in; how these businesses can achieve synergy. 
C)  How to integrate primary activities; increase shareholder wealth. 
D)  How to improve a firm's infrastructure; how to maintain ethical behaviour.

Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

Options exist when the owner of the option has

Vertical integration is attractive when

Unbalanced capacities that limit cost savings, difficulties in combining specializations, and reduced flexibility are disadvantages associated with

Which of the following tests considers the potential for synergy as advantage emerges for a new business because of its association with another company?

Explain the meaning of consistency as it applies to the evaluation of a corporate strategy.

The downsides or limitations of mergers and acquisitions include all of the following, except

Molson, Inc. of Montreal and Adolph Coors Co. of Golden, Colorado merged their operations in order to stand up to the

Transaction costs include all of the following costs, except

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

What are the primary benefits associated with related diversification?

Loblaw Companies Limited, with a strong presence in Ontario and western Canada, gained a footprint into the Quebec market by

_______ is when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant, positive change.

According to the text, Canfor Corporation of Vancouver is a good example from the forest industry of having followed a successful strategy, to expand across markets, of

A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.

In terms of strategy evaluation, which of the following terms refers to the capacity of the firm to achieve what it is embarking on?

Which of the following statements regarding internal development as a means of diversification is ?

When Rogers acquired Microcell, the clients of Fido, Microcell's brand name

Explain the limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

Which two related issues are addressed with a corporate-level strategy?