Question 1

You recently noticed a comment in a blog which stated: "By its very nature, restructuring is a violation of CSR!" How do you feel about that?

Accepted Answer

In all of these questions, the important thing is not so much the conclusion but the thought that went into the conclusion. Those who would agree with that view would certainly have many examples that they could use to show that many of the stakeholders were damaged with only a few benefiting such as the top management and sometimes (not always) the shareholders. Careers and communities have been destroyed and the people have not always been able to comparable employment nor have communities always been able to prevent urban decay by finding other employers for the community. On the other hand, it is possible that such restructuring can get rid of deadwood and poorly performing facilities so that the firm can reallocate its resources into areas or products that will generate significant growth and thus create more opportunities for stakeholders in the long run.

Question 2

The economic benefits of the last unit of growth (such as the last acquisition) can be defined as MBC.

Accepted Answer

A) True 
 B)False  False

Question 3

Research shows that the linkage between product diversification and firm performance seems to be inverted-U shaped.

Accepted Answer

A) True 
 B)False  True

Question 4

Answering why firms choose different diversification strategies does not help answer why firms differ and how they behave.

Accepted Answer

A) True 
 B)False

Question 5

Conglomeration tends to provide all of the following except:
a. Product-unrelated diversification.
b. Financial synergy.
c. Economies of scale.
d. Economies of scope.
e. Internal capital market.

Accepted Answer

The answer of Conglomeration tends to provide all of the...

Question 6

You and your firm need to develop policies that avoid acquisitions and restructuring.

Accepted Answer

A) True 
 B)False

Question 7

In the United States between the 1950s and 1970s MEB decreased, resulting in a decreased scope of the firm into conglomeration.

Accepted Answer

A) True 
 B)False

Question 8

The scope of the firm is thus determined by a comparison between MEB and MBC.

Accepted Answer

A) True 
 B)False

Question 9

Porter's five forces model can be used in regards to the structural attractiveness of an industry.

Accepted Answer

A) True 
 B)False

Question 10

To ensure the success of the M&A, managers need to make sure of all the following except:
a. Be willing to walk out when premiums are too high.
b. Engage in adequate due diligence concerning strategic fit.
c. Seek organizational contrast and variety rather than organizational fit.
d. Address the concerns of multiple stakeholders.
e. Recognize that that integration management is a fulltime job.

Accepted Answer

The answer of To ensure the success of the M&A,...

Question 11

Which geographic diversification is most likely to reduce the liability of foreignness?
a. Culturally adjacent countries.
b. Extensive international scope.
c. Beyond geographically neighboring countries.
d. Beyond culturally neighboring countries.
e. All of the above

Accepted Answer

The answer of Which geographic diversification is most likely to...

Question 12

Which is true of relatedness?
a. Measurement of product relatedness is no longer debatable.
b. A "product-related" firm will be considered related regardless of the measure used.
c. Some argue that product relatedness refers specifically to the visible product linkages.
d. Relatedness can be a common underlying dominant logic that connects various businesses in a diversified firm.
e. Product-unrelated conglomerates are not linked by institutional relatedness.

Accepted Answer

The answer of Which is true of relatedness?
a. Measurement of...

Question 13

An industry whose products can be easily substituted faces more threats from other firms currently not in the same industry.

Accepted Answer

A) True 
 B)False

Question 14

Which is true regarding restructuring?
a. There are two primary ways of restructuring namely downsizing and upsizing.
b. A rising level of competition within an industry normally prevents restructuring.
c. Corporate restructuring is not widely embraced around the world.
d. Restructuring is one of the first things to consider when trying to improve profitability.
e. Restructuring is easier in knowledge-intensive firms than capital intensive firms.

Accepted Answer

The answer of Which is true regarding restructuring?
a. There are...

Question 15

Which would be more characteristic of conglomerates?
a. "Putting one's eggs in one basket."
b. "Putting one's eggs in similar baskets."
c. "Putting one's eggs in different baskets."
d. A and B above.
e. B and C above.

Accepted Answer

The answer of Which would be more characteristic of conglomerates?
a....

Question 16

High entry barriers often result in green-field entries as opposed to acquisitions.

Accepted Answer

A) True 
 B)False

Question 17

At its core, diversification is essentially driven by all of the following except:
a. Economic benefits.
b. Bureaucratic costs.
c. Synergy.
d. Less complicated information systems.
e. MEB.

Accepted Answer

The answer of At its core, diversification is essentially driven...

Question 18

You should understand that the nature of your industry might call for diversification, acquisitions, and restructuring.

Accepted Answer

A) True 
 B)False

Question 19

The following managerial motives for conglomerations do not benefit shareholders except:
a. Norms.
b. Reducing managers' employment risk.
c. Organizational stability.
d. Pursuing power, prestige, and income.
e. Empire building.

Accepted Answer

The answer of The following managerial motives for conglomerations do...

Question 20

A superior product-related diversification strategy does not require a centralized and cooperative organizational architecture in order to add value.

Accepted Answer

A) True 
 B)False

Exam 9: Diversification and Acquisitions

You recently noticed a comment in a blog which stated: "By its very nature, restructuring is a violation of CSR!" How do you feel about that?

The economic benefits of the last unit of growth (such as the last acquisition) can be defined as MBC.

Research shows that the linkage between product diversification and firm performance seems to be inverted-U shaped.

Answering why firms choose different diversification strategies does not help answer why firms differ and how they behave.

Conglomeration tends to provide all of the following except: a. Product-unrelated diversification. b. Financial synergy. c. Economies of scale. d. Economies of scope. e. Internal capital market.

You and your firm need to develop policies that avoid acquisitions and restructuring.

In the United States between the 1950s and 1970s MEB decreased, resulting in a decreased scope of the firm into conglomeration.

The scope of the firm is thus determined by a comparison between MEB and MBC.

Porter's five forces model can be used in regards to the structural attractiveness of an industry.

Which geographic diversification is most likely to reduce the liability of foreignness? a. Culturally adjacent countries. b. Extensive international scope. c. Beyond geographically neighboring countries. d. Beyond culturally neighboring countries. e. All of the above

An industry whose products can be easily substituted faces more threats from other firms currently not in the same industry.

Which would be more characteristic of conglomerates? a. "Putting one's eggs in one basket." b. "Putting one's eggs in similar baskets." c. "Putting one's eggs in different baskets." d. A and B above. e. B and C above.

High entry barriers often result in green-field entries as opposed to acquisitions.

At its core, diversification is essentially driven by all of the following except: a. Economic benefits. b. Bureaucratic costs. c. Synergy. d. Less complicated information systems. e. MEB.

You should understand that the nature of your industry might call for diversification, acquisitions, and restructuring.

The following managerial motives for conglomerations do not benefit shareholders except: a. Norms. b. Reducing managers' employment risk. c. Organizational stability. d. Pursuing power, prestige, and income. e. Empire building.

A superior product-related diversification strategy does not require a centralized and cooperative organizational architecture in order to add value.