Question 1

Which of the following seems to be a major determinant of a new venture's success?

Accepted Answer

A) Large-scale entry into the target industry designed to build market share,even when such entry involves significant short-term losses 
B) Cautious small-scale entry into the target industry so that the company can assess the probable outcome of the venture without losing too much money 
C) A low level of integration between the marketing and the research and development functions of the venturing company 
D) Supporting many new venture projects in the hope that one will succeed 
E) Killing the new venture if it does not show a profit after the end of the third year

Question 2

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

Accepted Answer

A) True 
 B)False

Question 3

For diversification to increase profitability,a company's top managers must have superior entrepreneurial capabilities.

Accepted Answer

A) True 
 B)False

Question 4

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 5

What accounts for the high failure rate of all new products that reach the marketplace?

Accepted Answer

A) Market entry on too small a scale 
B) Poor commercialization of the new-venture product 
C) Poor corporate management of the new-venture unit 
D) All of these choices 
E) None of these choices

Question 6

Economies of scope typically involve

Accepted Answer

A) sharing resources by business units. 
B) acquiring resources from outside a company. 
C) limited utilization of resources by specific business units. 
D) all of these choices. 
E) none of these choices.

Question 7

Much of Tyco's growth in earnings in the early 1990s was driven by joint venturing.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

Diversification may dissipate value if it is wrongly based on

Accepted Answer

A) realizing economies of scope. 
B) pooling risks. 
C) transferring competencies. 
D) acquisitions and restructuring. 
E) leveraging existing competencies.

Question 12

The coordination required to realize value from a diversification strategy based on transferring,sharing,or leveraging competencies is a major source of bureaucratic costs.

Accepted Answer

A) True 
 B)False

Question 13

Companies that concentrate on just one industry may miss out on opportunities to increase their profitability by leveraging their distinctive competencies to make and sell products in new industries.

Accepted Answer

A) True 
 B)False

Question 14

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Accepted Answer

A) Joint ventures 
B) New ventures 
C) Acquisitions 
D) Long-term contracting 
E) Taper integration

Question 15

Which of the following is not a guideline for a successful acquisition?

Accepted Answer

A) Good bidding strategy 
B) A clear strategic rationale for making the acquisition 
C) Completing the acquisition quickly 
D) Thorough preacquisition screening 
E) Postacquisition audit to review the process and discuss ways to improve it

Question 16

A company pursuing a multibusiness model based on diversification may justify this strategy for what reason(s)?

Accepted Answer

A) Transfer competencies 
B) Reserve competencies 
C) Resource sharing 
D) Product bundling 
E) All of these choices

Question 17

The role of managers with respect to corporate-level strategy is to

Accepted Answer

A) identify which resources provide distinctive capabilities. 
B) identify which industries a company should compete in to maximize long-run profit. 
C) identify which of the company's businesses has a sustainable source of competitive advantage. 
D) position the firm within its industry. 
E) strengthen a company's core competitive competencies.

Question 18

Under what conditions should a firm that is facing the need to diversify consider the use of an internal new venture strategy,an acquisition strategy,or a joint venture strategy?

Accepted Answer

The answer of Under what conditions should a firm that...

Question 19

What is the process of transferring resources to and creating a new business unit in a new industry called?

Accepted Answer

A) External new venturing 
B) Exportation of resources 
C) Intrapreneuring 
D) Risk avoidance 
E) Internal new venturing

Question 20

What are the two general types of diversification and when would one be preferred over the other?

Accepted Answer

The answer of What are the two general types of...

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

Which of the following seems to be a major determinant of a new venture's success?

A company can increase the probability of success of an internal venture by constructing efficient scale manufacturing facilities ahead of demand.

For diversification to increase profitability,a company's top managers must have superior entrepreneurial capabilities.

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

What accounts for the high failure rate of all new products that reach the marketplace?

Economies of scope typically involve

Much of Tyco's growth in earnings in the early 1990s was driven by joint venturing.

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

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?

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

Diversification may dissipate value if it is wrongly based on

The coordination required to realize value from a diversification strategy based on transferring,sharing,or leveraging competencies is a major source of bureaucratic costs.

Companies that concentrate on just one industry may miss out on opportunities to increase their profitability by leveraging their distinctive competencies to make and sell products in new industries.

A company considering entering an industry that is in the mature stage of its life cycle would generally prefer which of the following entry strategies?

Which of the following is not a guideline for a successful acquisition?

A company pursuing a multibusiness model based on diversification may justify this strategy for what reason(s) ?

The role of managers with respect to corporate-level strategy is to

Under what conditions should a firm that is facing the need to diversify consider the use of an internal new venture strategy,an acquisition strategy,or a joint venture strategy?

What is the process of transferring resources to and creating a new business unit in a new industry called?

What are the two general types of diversification and when would one be preferred over the other?