Question 1

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  True

Question 2

The term "golden parachute" refers to

Accepted Answer

A)   a clause requiring that huge dividend payments be made upon takeover.
B)   financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
C)   managers of a firm involved in a hostile takeover approaching a third party about making the acquisition.
D)   pay given to executives fired because of a takeover.E) C) and D)
F) None of the above

Question 3

A firm should consider vertical integration when

Accepted Answer

A)   the competitive situation is highly volatile.
B)   customer needs are evolving.
C)   the firm's suppliers willingly cooperate with the firm.
D)   the firm's suppliers of raw materials are often unable to maintain quality standards.E) C) and D)
F) All of the above

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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.E) None of the above
F) A) and B)

Question 6

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Accepted Answer

A) True 
 B)False

Question 7

__________ reflect the collective learning in organizations, such as, how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.

Accepted Answer

A)   Primary value chain activities
B)   Cultures
C)   Core competencies
D)   Horizontal integrationsE) None of the above
F) C) and D)

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Briefly explain the advantages of vertical integration.

Accepted Answer

Vertical integration represents an expan...

Question 10

The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting.

Accepted Answer

A) True 
 B)False

Question 11

For strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A)   expensive premiums that are frequently paid to acquire a business.
B)   difficulties in integrating the activities and resources of the acquired firm into a corporation's on-going operations.
C)   it is a slow means to enter new markets and acquire skills and competences.
D)   there can be many cultural issues that can doom an otherwise promising acquisition.E) A) and D)
F) B) and C)

Question 13

Explain the limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

Accepted Answer

First, they compare SBUs on only two dimensions, making the implicit but erroneous assumption that (1) those are the only factors that really matter and (2) that every unit can be accurately compared on that basis. Second, the approach views each SBU as a stand-alone entity, ignoring common core business practices and value-creating activities that may hold promise for synergies across business units. Third, portfolio models do not explicitly incorporate an SBU's core competencies in the analysis, and they ignore the importance of nurturing and protecting those for the long-term viability and success of a business. Fourth, unless care is exercised, the process can become largely mechanical, substituting an oversimplified graphic model for the important contributions of the CEO's (and other corporate managers') experience and judgment. Fifth, a strict reliance on the rules regarding resource allocation across SBUs can be detrimental to a firm's long-term viability. For example, according to one study, over one-half of all the businesses that should have been cash users (based on the BCG matrix) were instead cash providers. Finally, though it is colourful and easy to comprehend, the imagery of a portfolio matrix can lead to some troublesome and overly simplistic prescriptions.

Question 14

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.E) B) and D)
F) A) and B) D

Question 15

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Accepted Answer

A) True 
 B)False

Question 16

Similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers.

Accepted Answer

A) True 
 B)False

Question 17

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.E) A) and B)
F) A) and C)

Question 18

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 19

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.E) All of the above
F) C) and D)

Question 20

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

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

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.

Correct Answer
verified
True

The term "golden parachute" refers to

Correct Answer
verified

A firm should consider vertical integration when

Correct Answer
verified

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

Correct Answer
verified

Real options analysis is most appropriate when

Correct Answer
verified

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Correct Answer
verified

__________ reflect the collective learning in organizations, such as, how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.

Correct Answer
verified

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

Correct Answer
verified

Briefly explain the advantages of vertical integration.

Correct Answer
verified
Vertical integration represents an expan...
View Answer

The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting.

Correct Answer
verified

For strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital.

Correct Answer
verified

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

Correct Answer
verified

Explain the limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

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

Correct Answer
verified
D

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Correct Answer
verified

Similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers.

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

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.

Correct AnswerverifiedTrue

The term "golden parachute" refers to

Correct AnswerverifiedShow Answer

A firm should consider vertical integration when

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Real options analysis is most appropriate when

Correct AnswerverifiedShow Answer

An advantage of internal development is that firms do not have to combine activities across the value chains of many companies and merge company cultures.

Correct AnswerverifiedShow Answer

__________ reflect the collective learning in organizations, such as, how to coordinate production skills, integrate multiple streams of technologies, and market and merchandise diverse products and services.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Briefly explain the advantages of vertical integration.

Correct AnswerverifiedVertical integration represents an expan...View AnswerShow Answer

The two principal means by which firms achieve synergy through market power are: pooled negotiating power and corporate parenting.

Correct AnswerverifiedShow Answer

For strategic alliances to be effective, reliance on written contracts to delimit responsibilities and enforce compliance is vital.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Explain the limitations of portfolio management matrices such as the growth-share matrix developed by the Boston Consulting Group (BCG).

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

Correct AnswerverifiedD

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Correct AnswerverifiedShow Answer

Similar businesses working together or the affiliation of a business with a strong parent can strengthen a firm's bargaining position relative to suppliers and customers.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
verified
True

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Vertical integration represents an expan...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified