Question 1

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

Accepted Answer

A)  products use similar distribution channels.
B)  value chains of the firm be similar enough in at least one way to allow for the leveraging of the core competencies of the firm.
C)  target market is the same,even if the products are very different.
D)  methods of production are the same.E) None of the above
F) All of the above

Question 2

Management restructuring typically involves changes in the composition of the ________,organizational structure,and reporting relationships.

Accepted Answer

A)  middle management team
B)  top management team
C)  lower management team
D)  board of directorsE) None of the above
F) C) and D)

Question 3

When firms diversify into unrelated businesses,the primary potential benefits are horizontal relationships,i.e. ,businesses sharing tangible and intangible resources.

Accepted Answer

A) True 
 B)False

Question 4

Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using

Accepted Answer

A)  deconstruction expertise.
B)  parenting expertise.
C)  excess personnel.
D)  increased market positioning.E) B) and C)
F) None of the above

Question 5

Common steps in management restructuring include all the following except

Accepted Answer

A)  tight financial control.
B)  rewards based on meeting short- to medium-term performance goals.
C)  penalties for missing short- to medium-term performance goals.
D)  reduction in the number of middle-level managers.E) C) and D)
F) A) and B)

Question 6

It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

Accepted Answer

A) True 
 B)False

Question 7

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.

Accepted Answer

A)  golden parachute
B)  poison pill
C)  greenmail
D)  scorched earthE) C) and D)
F) B) and C)

Question 8

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 strategiesE) B) and D)
F) All of the above

Question 9

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

Accepted Answer

A) True 
 B)False

Question 10

Many acquisitions ultimately result in divestiture.

Accepted Answer

A) True 
 B)False

Question 11

Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms.Using examples to support your response,give some explanations for this observation.

Accepted Answer

Feedback: Research shows that a majority...

Question 12

Internal development may be time consuming and,therefore,firms may forfeit the benefits of speed that growth through ________ and ________ can provide.

Accepted Answer

A)  strategic alliances;joint ventures
B)  strategic alliances;mergers
C)  mergers;acquisitions
D)  mergers;joint venturesE) All of the above
F) None of the above

Question 13

Explain potential benefits that can be gained from vertical (or hierarchical)relationships when corporations use unrelated diversification to increase value.

Accepted Answer

Feedback: Potential benefits can be gain...

Question 14

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 new business must have an established large market share.
D)  The collection of competencies should be unique,so that they cannot be easily imitated.E) All of the above
F) C) and D)

Question 15

Yahoo purchased Tumblr for 1.1 billion in 2013 but wrote off 80 percent of the investment by the middle of 2016.They considered this to be a poor

Accepted Answer

A)  expansion.
B)  divestiture.
C)  acquisition.
D)  cost savings.E) None of the above
F) All of the above

Question 16

The risks of vertical integration include all the following except

Accepted Answer

A)  costs and expenses associated with increased overhead and capital expenditures.
B)  lack of control over valuable assets.
C)  problems associated with unbalanced capacities along the value chain.
D)  additional administrative costs associated with managing a more complex set of activities.E) A) and B)
F) A) and C)

Question 17

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

Accepted Answer

A)  It is a slow means to enter new markets and acquire skills and competences.
B)  Difficulties exist in integrating the activities and resources of the acquired firm into ongoing operations.
C)  There can be many cultural issues that can doom an otherwise promising acquisition.
D)  Premiums that are frequently paid to acquire a business are large.E) None of the above
F) A) and D)

Question 18

A firm should consider vertical integration when

Accepted Answer

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

Question 19

With unrelated diversification,potential benefits can be gained from vertical or hierarchical relationships;that is,the creation of synergies from the interaction of the corporate office with outside stakeholders.

Accepted Answer

A) True 
 B)False

Question 20

Cooperative relationships such as ________ have potential advantages such as entering new markets,reducing manufacturing (or other) costs in the value chain,and developing and diffusing new technologies.

Accepted Answer

A)  franchises
B)  mergers
C)  acquisitions
D)  joint ventures and strategic alliancesE) None of the above
F) A) and C)

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

It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

Correct AnswerverifiedShow Answer

Benefits derived from horizontal and hierarchical relationships are mutually exclusive.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Cooperative relationships such as ________ have potential advantages such as entering new markets,reducing manufacturing (or other) costs in the value chain,and developing and diffusing new technologies.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

The risks of vertical integration include all the following except

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Management restructuring typically involves changes in the composition of the ________,organizational structure,and reporting relationships.

Correct AnswerverifiedShow Answer

Yahoo purchased Tumblr for 1.1 billion in 2013 but wrote off 80 percent of the investment by the middle of 2016.They considered this to be a poor

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?

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Explain potential benefits that can be gained from vertical (or hierarchical)relationships when corporations use unrelated diversification to increase value.

Correct AnswerverifiedFeedback: Potential benefits can be gain...View AnswerShow Answer

A firm should consider vertical integration when

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When firms diversify into unrelated businesses,the primary potential benefits are horizontal relationships,i.e. ,businesses sharing tangible and intangible resources.

Correct AnswerverifiedShow Answer

Internal development may be time consuming and,therefore,firms may forfeit the benefits of speed that growth through ________ and ________ can provide.

Correct AnswerverifiedShow Answer

Many acquisitions ultimately result in divestiture.

Correct AnswerverifiedShow Answer

Common steps in management restructuring include all the following except

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Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms.Using examples to support your response,give some explanations for this observation.

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Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

With unrelated diversification,potential benefits can be gained from vertical or hierarchical relationships;that is,the creation of synergies from the interaction of the corporate office with outside stakeholders.

Correct AnswerverifiedShow Answer

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Internal development may be time consuming and,therefore,firms may forfeit the benefits of speed that growth through and can provide.

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Feedback: Research shows that a majority...
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