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

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Question 61

Multiple Choice

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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.

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

E) All of the above
F) A) and B)

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Question 62

Multiple Choice

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The antitakeover tactic, _______, is when a firm offers to buy shares of their stock from a company (or individual) planning to acquire their firm at a higher price than the unfriendly company paid for it.

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

E) B) and C)
F) C) and D)

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Question 63

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

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 action is known as

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

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

One of the reasons it is said that only the investment banker wins when a company is acquired is that they

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

Portfolio management matrices are applied to what level of strategy?

Novartis, formerly Ciba-Geigy, uses portfolio management to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of using unrelated diversification corporate restructuring and parenting initiatives to create value.

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

If a multinational firm paid too high a premium for the common stock of the company, this can lead to

In the BCG Growth Share Matrix, the suggested strategy for Stars is to

In large, widely diversified firms, decision making can become slow and remote to market conditions thus creating potential difficulties for successful mergers as evidenced by the Cisco-Flip failure.