Question 1

The term golden parachute refers to _________.

Accepted Answer

A)  a clause requiring that huge dividend payments be made upon takeover 
B)  pay given to executives fired because of a takeover 
C)  financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it 
D)  managers of a firm in a hostile takeover approaching a third party about making the acquisition

Question 2

What are some of the key issues to take into account when considering whether or not to vertically integrate?

Accepted Answer

The answer of What are some of the key issues...

Question 3

One of the criteria for a core competence is that the different businesses in the corporation must be similar in at least one important way related to the core competence.

Accepted Answer

A) True 
 B)False

Question 4

Starbucks acquired the baker chain,La Boulange,with the intention of selling the bakery products at its coffee cafes.The increased market exposure for La Boulange is an example of a revenue enhancing benefit that can arise from the differentiation strategy.

Accepted Answer

A) True 
 B)False

Question 5

An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ______.

Accepted Answer

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

Question 6

When management uses common production facilities or purchasing procedures to distribute different but related products,they are ________________.

Accepted Answer

A)  building on core competencies 
B)  achieving process gains 
C)  sharing activities 
D)  using portfolio analysis

Question 7

Reasons for acquisition failure include: ineffective integration of the acquisition,too high of a premium paid for the common stock of the target company,or inability to understand how the assets of the acquired firm would fit with the lines of business of the existing company.

Accepted Answer

A) True 
 B)False

Question 8

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Accepted Answer

A) True 
 B)False

Question 9

Transaction costs include all of the following costs EXCEPT

Accepted Answer

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

Question 10

An oil refinery secures land leases and develops its own drilling capacity to ensure a constant supply of crude oil.This is an example of forward integration.

Accepted Answer

A) True 
 B)False

Question 11

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions,divestures,and new ventures.This is known as ________.

Accepted Answer

A)  restructuring 
B)  parenting 
C)  leveraging core competencies 
D)  increasing market power

Question 12

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 13

The main reason that automobile manufacturers have increased the amount of outsourced inputs is because of the importance of boom and bust cycles in the industry.

Accepted Answer

A) True 
 B)False

Question 14

Briefly explain the advantages and disadvantages of vertical integration.

Accepted Answer

The answer of Briefly explain the advantages and disadvantages of...

Question 15

Related diversification enables a firm to benefit from horizontal relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities.

Accepted Answer

A) True 
 B)False

Question 16

Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

Accepted Answer

A) True 
 B)False

Question 17

Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant,positive change.

Accepted Answer

A) True 
 B)False

Question 18

Internal development may be time consuming and,therefore,firms may forfeit the benefits of speed that growth through __________ and __________ can provide.

Accepted Answer

A)  strategic alliances; joint ventures 
B)  strategic alliances; mergers 
C)  mergers; acquisitions 
D)  mergers; strategic alliances

Question 19

Economies of scope are cost savings from leveraging core competencies or sharing unrelated activities among businesses in a corporation.

Accepted Answer

A) True 
 B)False

Question 20

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Accepted Answer

A) True 
 B)False

Exam 6: Corporate-Level Strategy: Creatingvalue Through Diversification

The term golden parachute refers to _________.

What are some of the key issues to take into account when considering whether or not to vertically integrate?

One of the criteria for a core competence is that the different businesses in the corporation must be similar in at least one important way related to the core competence.

Starbucks acquired the baker chain,La Boulange,with the intention of selling the bakery products at its coffee cafes.The increased market exposure for La Boulange is an example of a revenue enhancing benefit that can arise from the differentiation strategy.

An antitakeover tactic in which existing shareholders have the option to buy additional shares of stock at a discount to the current market price is called ______.

When management uses common production facilities or purchasing procedures to distribute different but related products,they are ________________.

Reasons for acquisition failure include: ineffective integration of the acquisition,too high of a premium paid for the common stock of the target company,or inability to understand how the assets of the acquired firm would fit with the lines of business of the existing company.

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Transaction costs include all of the following costs EXCEPT

An oil refinery secures land leases and develops its own drilling capacity to ensure a constant supply of crude oil.This is an example of forward integration.

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions,divestures,and new ventures.This is known as ________.

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

The main reason that automobile manufacturers have increased the amount of outsourced inputs is because of the importance of boom and bust cycles in the industry.

Briefly explain the advantages and disadvantages of vertical integration.

Related diversification enables a firm to benefit from horizontal relationships across different businesses in the diversified corporation by leveraging core competencies and sharing activities.

Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

Restructuring requires the corporate office to find either poorly performing firms with unrealized potential or firms in industries on the threshold of significant,positive change.

Internal development may be time consuming and,therefore,firms may forfeit the benefits of speed that growth through and can provide.

Economies of scope are cost savings from leveraging core competencies or sharing unrelated activities among businesses in a corporation.

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.