Question 1

Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements.

Accepted Answer

A) True 
 B)False

Question 2

According to the text,the main source of synergy in unrelated diversification is the value created by the knowledge and expertise of the corporate office.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

When using the BCG matrix,a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a

Accepted Answer

A)  cow. 
B)  dog. 
C)  problem child. 
D)  star.

Question 5

Loblaw,with a strong presence in Ontario and Western Canada,gained a footprint into the Quebec market by

Accepted Answer

A)  establishing a clear understanding between partners. 
B)  acquiring Provigo. 
C)  not shortchanging your partner. 
D)  working hard to ensure a collaborative relationship between partners.

Question 6

An anti-takeover tactic called a ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it.

Accepted Answer

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

Question 7

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

Accepted Answer

A) True 
 B)False

Question 8

Real options analysis is most appropriate when

Accepted Answer

A)  the total investment required is small, but the environment is uncertain. 
B)  the investment required can be justified by Discounted Cash Flow (DCF) techniques. 
C)  a small investment up front can be followed by a series of subsequent investments. 
D)  there is no prospect of obtaining additional knowledge before making subsequent investments.

Question 9

What are the primary benefits associated with unrelated diversification?

Accepted Answer

The answer of What are the primary benefits associated with...

Question 10

Vertical integration is attractive when

Accepted Answer

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

Question 11

A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.

Accepted Answer

A) True 
 B)False

Question 12

Discuss how the potential benefits of diversification may be adversely affected by conflicts between managers' interests and shareholders' interests.

Accepted Answer

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

Question 13

It may be advantageous to vertically integrate when

Accepted Answer

A)  lower transaction costs and improved coordination are vital and achievable. 
B)  the minimum efficient scales of two corporations are different. 
C)  flexibility is reduced, providing a more stationary position in the competitive environment. 
D)  various segregated specializations will be combined.

Question 14

Which of the following statements regarding internal development as a means of diversification is false?

Accepted Answer

A)  Many companies use internal development to extend their product lines or add to their service offerings. 
B)  An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services. 
C)  The firm is able to capture the wealth created without having to "share the wealth" with alliance partners. 
D)  Firms can often develop products or services at a lower cost if they rely on their own resources instead of external funding.

Question 15

Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business.

Accepted Answer

A) True 
 B)False

Question 16

Molson,Inc.of Montreal and Coors Co.of Golden,Colorado merged their operations in order to stand up to the

Accepted Answer

A)  continued diversification in the beverage market. 
B)  competition from Japan. 
C)  continuing consolidation in the global beer industry. 
D)  substantial cash outlays to maintain market share.

Question 17

When Rogers acquired Microcell,the clients of Fido,Microcell's brand name

Accepted Answer

A)  costs and associated expenses increased with expanded overhead and capital expenditures. 
B)  instantly gained broader market coverage and better reception for their phones. 
C)  problems developed with unbalanced capacities along the value chain. 
D)  additional administrative costs associated with managing a more complex set of activities increased.

Question 18

Sharing core competencies is one of the primary potential advantages of diversification.In order for diversification to be most successful,it is important that

Accepted Answer

A)  the similarity required for sharing core competencies must be in the value chain, not in the product. 
B)  the products use similar distribution channels. 
C)  the target market is the same, even if the products are very different. 
D)  the methods of production are the same.

Question 19

Explain how transaction cost analysis can provide insights into vertical integration decisions.

Accepted Answer

The answer of Explain how transaction cost analysis can provide...

Question 20

A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification.

Accepted Answer

A) True 
 B)False

Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

Sharing activities across business units can provide two primary benefits: cost savings and revenue enhancements.

According to the text,the main source of synergy in unrelated diversification is the value created by the knowledge and expertise of the corporate office.

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

When using the BCG matrix,a business that currently holds a large market share in a rapidly growing market and that has minimal or negative cash flow would be known as a

Loblaw,with a strong presence in Ontario and Western Canada,gained a footprint into the Quebec market by

An anti-takeover tactic called a ___________ is when a firm offers to buy shares of their stock from a company planning to acquire their firm at a higher price than the unfriendly company paid for it.

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

Real options analysis is most appropriate when

What are the primary benefits associated with unrelated diversification?

Vertical integration is attractive when

A newly acquired business must always have products that are similar to the existing businesses' products to benefit from the corporation's core competence.

Discuss how the potential benefits of diversification may be adversely affected by conflicts between managers' interests and shareholders' interests.

It may be advantageous to vertically integrate when

Which of the following statements regarding internal development as a means of diversification is false?

Portfolio management matrices generally consist of two axes that reflect industry or market growth and the market share of a business.

Molson,Inc.of Montreal and Coors Co.of Golden,Colorado merged their operations in order to stand up to the

When Rogers acquired Microcell,the clients of Fido,Microcell's brand name

Sharing core competencies is one of the primary potential advantages of diversification.In order for diversification to be most successful,it is important that

Explain how transaction cost analysis can provide insights into vertical integration decisions.

A publishing company that purchases a chain of bookstores to sell its books is an example of unrelated diversification.