Question 1

A joint venture allows a company to share the risks and costs associated with establishing a new business unit with another company.

Accepted Answer

A) True 
 B)False

Question 2

A diversification strategy based on resource sharing

Accepted Answer

A)  entails a company creating value by applying the distinctive competencies it developed in one line of business to another line of business. 
B)  requires the development of new business-level strategies. 
C)  can help a company to realize economies of scope. 
D)  is a valid way of supporting the generic business-level strategy of differentiation. 
E)  increases the accountability of units.

Question 3

Companies with a strong track record of internal new venturing generally excel at research and development.

Accepted Answer

A) True 
 B)False

Question 4

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

Question 5

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 firm 
E)  Difficulties in coordinating manufacturing activities

Question 6

Which of the following is not a general organizational competency?

Accepted Answer

A)  Entrepreneurial capabilities 
B)  Capabilities in organizational design 
C)  Superior strategic capabilities 
D)  Product bundling 
E)  All of these

Question 7

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create

Accepted Answer

A)  a new business unit in the same industry. 
B)  a new business unit in a different industry. 
C)  a new industry. 
D)  a new market segment. 
E)  new customers in the same industry.

Question 8

When McDonald's introduced the McCafe,it began offering a new product that was not available in traditional McDonald's stores.The introduction of the McCafe is an example of which of the following?

Accepted Answer

A)  Transferring competencies 
B)  Diversification 
C)  Commonality 
D)  Economies of scope 
E)  Bureaucratic costs

Question 9

In which of the following cases are bureaucratic costs likely to be lowest?

Accepted Answer

A)  A vertically integrated company with five divisions that pursues full integration 
B)  A company with five divisions that pursues related diversification based on economies of scope 
C)  A company with five divisions that pursues related diversification based on transferring competencies 
D)  A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring 
E)  A company with twenty divisions that pursues taper integration

Question 10

A company should pursue related diversification only to enhance the competitive position of its core business.

Accepted Answer

A) True 
 B)False

Question 11

An appropriate reason to diversify is to pool the risk from several business ventures in order to create a more stable income stream.

Accepted Answer

A) True 
 B)False

Question 12

Differentiate between joint venture and aquisition as a method to enter new industries.Discuss the advatages and disadvanatges associated with each.

Accepted Answer

The answer of Differentiate between joint venture and aquisition as...

Question 13

General organizational competencies refer to competencies

Accepted Answer

A)  existing in individual business units. 
B)  existing in individual functional units. 
C)  existing in the industry in which a company operates. 
D)  that can be procured in the marketplace. 
E)  that transcend individual functions or business units.

Question 14

Product bundling refers to

Accepted Answer

A)  preparation of products for shipment. 
B)  a complete package of related products. 
C)  a method of stocking products efficiently. 
D)  an inventory procedure for ensuring effective counting of products. 
E)  a package of unrelated products.

Question 15

Firms with superior strategic capabilities can create profitable new business units at a much higher rate than most other companies can.

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because they can more effectively pool,share,and utilize resources or capabilities.

Accepted Answer

A) True 
 B)False

Question 18

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

Accepted Answer

A)  Diversify through acquisition 
B)  Do not diversify at all 
C)  Diversify with an internal new venture 
D)  Diversify with a joint venture 
E)  Diversify through vertical integration

Question 19

Miller Brewing was related to Philip Morris's tobacco business because it was possible to create important maketing commonalities: both beer and tobacco are mass market consumer goods in which brand positioning,advertising,and product development skills are crucial to create successful new products.This is an example of which of the following?

Accepted Answer

A)  Transferring competencies 
B)  Leveraging competencies 
C)  General organizational competencies 
D)  Economies of scope 
E)  Organizational design skills

Question 20

An advantage of related diversification is that it allows a company to quickly gain entry into a new industry where barriers are high.

Accepted Answer

A) True 
 B)False

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

A joint venture allows a company to share the risks and costs associated with establishing a new business unit with another company.

A diversification strategy based on resource sharing

Companies with a strong track record of internal new venturing generally excel at research and development.

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?

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

Which of the following is not a general organizational competency?

Leveraging competencies involves taking a distinctive competency developed by a business unit in one industry to create

When McDonald's introduced the McCafe,it began offering a new product that was not available in traditional McDonald's stores.The introduction of the McCafe is an example of which of the following?

In which of the following cases are bureaucratic costs likely to be lowest?

A company should pursue related diversification only to enhance the competitive position of its core business.

An appropriate reason to diversify is to pool the risk from several business ventures in order to create a more stable income stream.

Differentiate between joint venture and aquisition as a method to enter new industries.Discuss the advatages and disadvanatges associated with each.

General organizational competencies refer to competencies

Product bundling refers to

Firms with superior strategic capabilities can create profitable new business units at a much higher rate than most other companies can.

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

Economies of scope arise when one or more of a diversified company's business units are able to realize cost-saving or differentiation advantages because they can more effectively pool,share,and utilize resources or capabilities.

Stanley's services firm wants to enter an embryonic market,but it doesn't have enough cash to purchase the required assets.Which of the following strategies would you recommend to Stanley?

An advantage of related diversification is that it allows a company to quickly gain entry into a new industry where barriers are high.