Question 1

When a company enters a new business in a different industry from that in which it currently operates and does not expect to achieve any value chain synergies,this is ________ diversification.

Accepted Answer

A)   Financial
B)   Capital-driven
C)   Unrelated
D)   Opportunistic

Question 2

Corporate strategy answers the question "What businesses should we be in?" while business strategy answers the question "How should we compete in this business?"

Accepted Answer

A) True 
 B)False  True

Question 3

A common criticism that applies to many portfolio models is that they are based on the past instead of the future.

Accepted Answer

A) True 
 B)False  True

Question 4

The industry-based view posits that the degree of competitiveness in an industry largely determines firm performance.

Accepted Answer

A) True 
 B)False

Question 5

Managers sometimes choose to diversify because they are motivated by power,income,and status.

Accepted Answer

A) True 
 B)False

Question 6

Management of resources is a major corporate-level strategic management responsibility.

Accepted Answer

A) True 
 B)False

Question 7

The ultimate test of the value of a corporate-level strategy is whether the:

Accepted Answer

A)   Corporation earns a great deal of money
B)   Top management team is satisfied with the corporation's performance
C)   Businesses in the portfolio are worth more under the management of the company in question than they would be under any other ownership
D)   Businesses in the portfolio increase the firm's financial returns

Question 8

Firms that have selected a related diversification corporate-level strategy seek to exploit:

Accepted Answer

A)   Control shared among business-unit managers
B)   Economies of scope between business units
C)   The favourable demand of buyers
D)   Market power

Question 9

A variety of studies over the years conclude that diversification is nearly as likely to destroy shareholder value as it is to create shareholder value.

Accepted Answer

A) True 
 B)False

Question 10

Corporate-level strategies are strategies a firm uses to diversify its operations from a single business competing in a single market into several product markets and,most commonly,into several businesses.

Accepted Answer

A) True 
 B)False

Question 11

In what ways can head offices destroy value?

Accepted Answer

.By becoming established as the perceive...

Question 12

What issues should head offices address when considering how they might best add value to the business as a whole?

Accepted Answer

.How to control and co-ordinate the cons...

Question 13

The downside of synergy in a diversified firm is:

Accepted Answer

A)   Increasing independence of businesses
B)   The reduction of activity sharing
C)   Excessive focus on risky innovation
D)   The loss of flexibility

Question 14

Horizontal diversification occurs when a merger or acquisition combines two companies that are in different industries but share the same customers.

Accepted Answer

A) True 
 B)False

Question 15

Related diversification differs from unrelated diversification in which of the following ways?

Accepted Answer

A)   Related diversification is connected to the organization's dominant business; unrelated diversification is not
B)   Unrelated diversification is connected to the organization's dominant business; related diversification is not
C)   Single business firms use related diversification and never use unrelated diversification
D)   Single business firms use unrelated diversification and never use related diversification

Question 16

The basic types of operational economies through which firms seek value from economies of scope are:

Accepted Answer

A)   Synergies between internal and external capital markets
B)   The leveraging of individual tangible resources
C)   The sharing of primary and support activities
D)   Joint ventures and outsourcing

Question 17

Should a company choose to divest a business unit it can create a new company from the business unit with its own shares of stock and its own board of directors. This is called a(n) :

Accepted Answer

A)   Satellite company
B)   Asset sale
C)   Spin-off
D)   Re-liquidation

Question 18

One advantage of an unrelated diversification strategy in a developed economy is that competitors cannot easily imitate the financial economies whereas they can easily replicate the value gained through the use of a related diversification strategy.

Accepted Answer

A) True 
 B)False

Question 19

A firm uses a corporate-level diversification strategy for a variety of reasons all of which have to do with ways to create value.

Accepted Answer

A) True 
 B)False

Question 20

Synergy exists when:

Accepted Answer

A)   Cost savings are realized through improved allocations of financial resources based on investments inside or outside the firm
B)   Two units create value by utilizing market power in their respective industries
C)   Firms utilize constrained related diversification to build an attractive portfolio of businesses
D)   The value created by business units working together exceeds the value the units create when working independently D

Exam 8: Corporate-Level Strategy

When a company enters a new business in a different industry from that in which it currently operates and does not expect to achieve any value chain synergies,this is ________ diversification.

Correct AnswerverifiedShow Answer

Corporate strategy answers the question "What businesses should we be in?" while business strategy answers the question "How should we compete in this business?"

Correct AnswerverifiedTrue

A common criticism that applies to many portfolio models is that they are based on the past instead of the future.

Correct AnswerverifiedTrue

The industry-based view posits that the degree of competitiveness in an industry largely determines firm performance.

Correct AnswerverifiedShow Answer

Managers sometimes choose to diversify because they are motivated by power,income,and status.

Correct AnswerverifiedShow Answer

Management of resources is a major corporate-level strategic management responsibility.

Correct AnswerverifiedShow Answer

The ultimate test of the value of a corporate-level strategy is whether the:

Correct AnswerverifiedShow Answer

Firms that have selected a related diversification corporate-level strategy seek to exploit:

Correct AnswerverifiedShow Answer

A variety of studies over the years conclude that diversification is nearly as likely to destroy shareholder value as it is to create shareholder value.

Correct AnswerverifiedShow Answer

Corporate-level strategies are strategies a firm uses to diversify its operations from a single business competing in a single market into several product markets and,most commonly,into several businesses.

Correct AnswerverifiedShow Answer

In what ways can head offices destroy value?

Correct Answerverified.By becoming established as the perceive...View AnswerShow Answer

What issues should head offices address when considering how they might best add value to the business as a whole?

Correct Answerverified.How to control and co-ordinate the cons...View AnswerShow Answer

The downside of synergy in a diversified firm is:

Correct AnswerverifiedShow Answer

Horizontal diversification occurs when a merger or acquisition combines two companies that are in different industries but share the same customers.

Correct AnswerverifiedShow Answer

Related diversification differs from unrelated diversification in which of the following ways?

Correct AnswerverifiedShow Answer

The basic types of operational economies through which firms seek value from economies of scope are:

Correct AnswerverifiedShow Answer

Should a company choose to divest a business unit it can create a new company from the business unit with its own shares of stock and its own board of directors. This is called a(n) :

Correct AnswerverifiedShow Answer

One advantage of an unrelated diversification strategy in a developed economy is that competitors cannot easily imitate the financial economies whereas they can easily replicate the value gained through the use of a related diversification strategy.

Correct AnswerverifiedShow Answer

A firm uses a corporate-level diversification strategy for a variety of reasons all of which have to do with ways to create value.

Correct AnswerverifiedShow Answer

Synergy exists when:

Correct AnswerverifiedD

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.How to control and co-ordinate the cons...
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