Question 1

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 2

Summarize the advantages and disadvantages of mergers and acquisitions as a means of diversification.

Accepted Answer

The answer of Summarize the advantages and disadvantages of mergers...

Question 3

Among the advantages of acquisitions are the expensive premiums that are frequently paid to acquire a business.

Accepted Answer

A) True 
 B)False

Question 4

Diversification initiatives include all of the following except ___________________.

Accepted Answer

A)  mergers and acquisitions 
B)  strategic alliances 
C)  joint ventures 
D)  shareholder development

Question 5

Market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation.

Accepted Answer

A) True 
 B)False

Question 6

One of the risks of vertical integration is that there may be problems associated with unbalanced capacities along the value chain of a firm.

Accepted Answer

A) True 
 B)False

Question 7

Strategic alliances are arrangements in which two firms join forces and form a cooperative partnership.Discuss the advantages and disadvantages of strategic alliances as well as guidelines for reducing conflict between the partners.

Accepted Answer

The answer of Strategic alliances are arrangements in which two...

Question 8

Creating value within business units can happen 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.This is action is known as ______.

Accepted Answer

A)  parenting 
B)  leveraging core competencies 
C)  restructuring 
D)  sharing activities

Question 9

For a core competence to be a viable basis for the corporation strengthening a new business unit,there are three requirements.Which one of the following is not one of these requirements?

Accepted Answer

A)  The competence must help the business gain strength relative to its competition. 
B)  The new business must be similar to existing businesses to benefit from a core competence. 
C)  The collection of competencies should be unique, so that they cannot be easily imitated. 
D)  The new business must have an established large market share.

Question 10

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)  dispersing manager focus 
D)  raising cash to help fund existing businesses

Question 11

The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:

Accepted Answer

A)  Premiums that are frequently paid to acquire a business are expensive. 
B)  Difficulties exist in integrating the activities and resources of the acquired firm into on-going operations. 
C)  There can be many cultural issues that can doom an otherwise promising acquisition. 
D)  It is a slow means to enter new markets and acquire skills and competences.

Question 12

At Cooper Industries,there are few similarities in the products it makes or the industries in which it completes.The corporate office adds value through such activities as superb human resource practices and budgeting systems.This is an example of __________________.

Accepted Answer

A)  using related diversification to achieve value by leveraging core competencies to attain economies of scope 
B)  using related diversification to achieve value by leveraging core competencies to acquire market power 
C)  using unrelated diversification to achieve value through portfolio management in order to acquire financial synergies 
D)  using unrelated diversification to achieve value through restructuring and parenting

Question 13

Vertical integration is attractive when ____________.

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Discuss some of the potential benefits of divestment.

Accepted Answer

The answer of Discuss some of the potential benefits of...

Question 16

When sharing activities across business units,a company can attain the highest cost savings when it acquires another from the same industry in the same country.

Accepted Answer

A) True 
 B)False

Question 17

Discuss how the potential benefits of diversification may be adversely affected by conflicts between manager interests and stockholder interests.Hint: Egotism,growth for the sake of growth,antitakeover tactics.

Accepted Answer

The answer of Discuss how the potential benefits of diversification...

Question 18

According to Michael Porter,there is a tremendous allure to _________.It is the big play,the dramatic gesture.With one stroke of the pen you can add billions to size,get a front-page story,and create excitement in markets.

Accepted Answer

A)  strategic alliances and joint ventures 
B)  internal development 
C)  mergers and acquisitions 
D)  differentiation strategies

Question 19

Many acquisitions ultimately result in divestiture.

Accepted Answer

A) True 
 B)False

Question 20

All of the following are limitations (or downsides)of the BCG (Boston Consulting Group)matrix EXCEPT:

Accepted Answer

A)  Every business cannot be accurately measured and compared on the two dimensions. 
B)  It takes a dynamic view of competition which can lead to overly complex analyses. 
C)  It views each business as a stand-alone entity and ignores the potential for synergies across businesses. 
D)  While easy to comprehend, the BCG matrix can lead to some troublesome and overly simplistic prescriptions.

Exam 6: Corporate-Level Strategy: Creatingvalue Through Diversification

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

Summarize the advantages and disadvantages of mergers and acquisitions as a means of diversification.

Among the advantages of acquisitions are the expensive premiums that are frequently paid to acquire a business.

Diversification initiatives include all of the following except ___________________.

Market power refers to cost savings from leveraging core competencies or sharing activities among the businesses in a corporation.

One of the risks of vertical integration is that there may be problems associated with unbalanced capacities along the value chain of a firm.

Strategic alliances are arrangements in which two firms join forces and form a cooperative partnership.Discuss the advantages and disadvantages of strategic alliances as well as guidelines for reducing conflict between the partners.

Creating value within business units can happen 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.This is action is known as ______.

For a core competence to be a viable basis for the corporation strengthening a new business unit,there are three requirements.Which one of the following is not one of these requirements?

Divesting of businesses can accomplish many different objectives,except _______.

The downsides or limitations of mergers and acquisitions include all of the following EXCEPT:

At Cooper Industries,there are few similarities in the products it makes or the industries in which it completes.The corporate office adds value through such activities as superb human resource practices and budgeting systems.This is an example of __________________.

Vertical integration is attractive when ____________.

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

Discuss some of the potential benefits of divestment.

When sharing activities across business units,a company can attain the highest cost savings when it acquires another from the same industry in the same country.

Discuss how the potential benefits of diversification may be adversely affected by conflicts between manager interests and stockholder interests.Hint: Egotism,growth for the sake of growth,antitakeover tactics.

According to Michael Porter,there is a tremendous allure to _________.It is the big play,the dramatic gesture.With one stroke of the pen you can add billions to size,get a front-page story,and create excitement in markets.

Many acquisitions ultimately result in divestiture.

All of the following are limitations (or downsides) of the BCG (Boston Consulting Group) matrix EXCEPT: