Question 1

If a multinational firm paid too high a premium for the common stock of the company, this can lead to

Accepted Answer

A)  divestiture. 
B)  expansion. 
C)  cost savings. 
D)  acquisition.

Question 2

An acquisition that results in ________ commonly indicates that expectations were not met.

Accepted Answer

A)  expansion 
B)  divestiture 
C)  cost savings 
D)  increased sales

Question 3

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions. This is an example of using

Accepted Answer

A)  related diversification to acquire economies of scope by leveraging pooled negotiating power. 
B)  related diversification to acquire market power by leveraging pooled negotiating power. 
C)  unrelated diversification to acquire financial synergies through portfolio management. 
D)  unrelated diversification to acquire parenting, restructuring, and financial synergies through restructuring and parenting.

Question 4

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

Accepted Answer

A) True 
 B)False

Question 5

Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics?

Accepted Answer

A)  Businesses are plotted on a 3-dimensional grid. 
B)  Grid dimensions are based on external environments and internal capabilities-market positions. 
C)  Position in the matrix suggests a need for sharing synergies. 
D)  They are most helpful in helping businesses develop types of competitive advantage.

Question 6

Asset restructuring involves the sale of ________ assets, or even whole lines of businesses that are peripheral.

Accepted Answer

A)  productive 
B)  efficient 
C)  unproductive 
D)  inefficient

Question 7

The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.

Accepted Answer

A) True 
 B)False

Question 8

Discuss and explain the three criteria that a core competence must meet if it is to create value and to provide a viable basis for synergy among the businesses in a corporation.

Accepted Answer

The answer of Discuss and explain the three criteria that...

Question 9

If a multinational firm is unable to understand how the assets of the acquired company would fit with their own lines of business, this can lead to

Accepted Answer

A)  expansion. 
B)  divestiture. 
C)  cost savings. 
D)  acquisition.

Question 10

Corporate-level strategy focuses on

Accepted Answer

A)  gaining long-term revenue. 
B)  gaining short-term profits. 
C)  decreasing business locations. 
D)  managing investment bankers and their interests.

Question 11

When a firm diversifies into ________ businesses, the primary potential benefits to be derived come from ________ relationships-those businesses that share intangible and tangible resources.

Accepted Answer

A)  related; hierarchical 
B)  unrelated; hierarchical 
C)  related; horizontal 
D)  unrelated; horizontal

Question 12

Diversification initiatives must be justified by the creation of value for shareholders.

Accepted Answer

A) True 
 B)False

Question 13

Cooperative relationships such as ________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusingnew technologies.

Accepted Answer

A)  franchises 
B)  mergers 
C)  acquisitions 
D)  jointventures and strategic alliances

Question 14

Which of the following is not part of a good guideline list for managing strategic alliances?

Accepted Answer

A)  establishing a clear understanding between partners 
B)  not shortchanging your partner 
C)  relying primarily on a contract to make the joint venture work 
D)  working hard to ensure a collaborative relationship between partners

Question 15

Divesting of businesses can accomplish many different objectives, except

Accepted Answer

A)  enabling managers to focus their efforts more directly on the core businesses of the firm. 
B)  providing the firm with more resources to spend on more attractive alternatives. 
C)  raising cash to help fund existing businesses. 
D)  dispersing manager focus.

Question 16

Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms. Using examples to support your response, give some explanations for this observation.

Accepted Answer

The answer of Academic research indicates that on average acquisitions...

Question 17

The antitakeover tactic, ________, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

Accepted Answer

A)  golden parachute 
B)  poison pill 
C)  greenmail 
D)  scorched earth

Question 18

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

Accepted Answer

A) True 
 B)False

Question 19

Microsoft offered in 2016 to buy LinkedIn for 26.2 billion USD which was 50 percent higher than the value for LinkedIn the day before. This high premium offer was necessary for Microsoft to complete ________ initiative.

Accepted Answer

A)  a low cost 
B)  an internal development 
C)  a diversification 
D)  a divestiture

Question 20

When firms diversify into unrelated businesses, the primary potential benefits are horizontal relationships, i.e., businesses sharing tangible and intangible resources.

Accepted Answer

A) True 
 B)False

Exam 6: Corporate-Level Strategy Creating Value through Diversification

If a multinational firm paid too high a premium for the common stock of the company, this can lead to

An acquisition that results in ________ commonly indicates that expectations were not met.

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions. This is an example of using

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

Portfolio management frameworks, such as the BCG matrix, share which of the following characteristics?

Asset restructuring involves the sale of ________ assets, or even whole lines of businesses that are peripheral.

The potential advantages of strategic alliances and joint ventures include entering new markets as well as developing and diffusing new technologies.

Discuss and explain the three criteria that a core competence must meet if it is to create value and to provide a viable basis for synergy among the businesses in a corporation.

If a multinational firm is unable to understand how the assets of the acquired company would fit with their own lines of business, this can lead to

Corporate-level strategy focuses on

When a firm diversifies into businesses, the primary potential benefits to be derived come from relationships-those businesses that share intangible and tangible resources.

Diversification initiatives must be justified by the creation of value for shareholders.

Cooperative relationships such as ________ have potential advantages such as entering new markets, reducing manufacturing (or other) costs in the value chain, and developing and diffusingnew technologies.

Which of the following is not part of a good guideline list for managing strategic alliances?

Divesting of businesses can accomplish many different objectives, except

Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms. Using examples to support your response, give some explanations for this observation.

The antitakeover tactic, ________, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

A disadvantage of mergers and acquisitions is that they can enable a firm to rapidly enter new product markets.

Microsoft offered in 2016 to buy LinkedIn for 26.2 billion USD which was 50 percent higher than the value for LinkedIn the day before. This high premium offer was necessary for Microsoft to complete ________ initiative.

When firms diversify into unrelated businesses, the primary potential benefits are horizontal relationships, i.e., businesses sharing tangible and intangible resources.