A) their value chains exhibit competitively valuable cross-business commonalities.
B) the products of the different businesses are bought by many of the same types of buyers.
C) the products of the different businesses are sold in the same types of retail stores.
D) the businesses have several key suppliers in common.
E) the production methods they employ both entail economies of scale.
G) A) and B)
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A) the pursuit of rapid growth strategies in its most promising businesses.
B) initiating profit improvement or turnaround strategies in weak-performing businesses with potential.
C) the divestiture of unattractive businesses.
D) the pursuit of debt reduction opportunities that can lower the debt/equity ratio while maintaining asset levels.
E) the divestiture of businesses that do not fit into the company's longer term plans.
G) B) and E)
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A) sell products from the different businesses to much the same types of buyers and retail outlets.
B) have dissimilar value chains and resource requirements with no competitively important cross-business commonalities at the value chain level.
C) perform better than just the sum of the individual businesses.
D) will always have several key suppliers in common.
E) employ production methods that create economies of scale.
G) B) and D)
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A) sticking closely with the existing business lineup and pursuing available opportunities.
B) broadening the scope of diversification by entering additional industries.
C) divesting some businesses and retrenching to a narrower collection of businesses.
D) restructuring the entire company by adding and removing businesses to improve overall performance.
E) refocusing the existing businesses on new substitute product-line opportunities outside the existing industry framework.
G) A) and C)
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A related diversification strategy invol...View Answer
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Any approach to diversification is fine ...View Answer
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A) Cash hog
B) Cash cow
C) Cash chest
D) Free cash flow
E) Cash generator
G) All of the above
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A) the costs of searching for an attractive target.
B) the costs of evaluating its worth.
C) bargaining costs.
D) the costs of completing the transaction.
E) the premium cost.
G) None of the above
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A) offers ways for a firm to realize 1 + 1 = 3 benefits because the value chains of the different businesses present competitively valuable cross-business relationships.
B) is less capital intensive and usually more profitable than unrelated diversification.
C) involves diversifying into industries having the same kinds of key success factors.
D) is less risky than either vertical integration or unrelated diversification due to lower capital requirements.
E) passes the industry attractiveness test and thus offers the best route to 2 + 2 = 4 benefits.
G) A) and C)
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A) determining each industry's key success factors, calculating the ability of the company to be successful on each industry KSF, and obtaining overall measures of the firm's ability to compete successfully in each of its industries based on the combined KSF ratings.
B) determining each industry's competitive advantage factors, calculating the ability of the company to be successful on each competitive advantage factor, and obtaining overall measures of the firm's ability to achieve sustainable competitive advantage in each of its industries based on the combined competitive advantage factor ratings.
C) selecting a set of industry attractiveness measures, weighting the importance of each measure, rating each industry on each attractiveness measure, multiplying the industry ratings by the assigned weight to obtain a weighted rating, adding the weighted ratings for each industry to obtain an overall industry attractiveness score, and using the overall industry attractiveness scores to interpret the attractiveness of all the industries, both individually and as a group.
D) rating the attractiveness of each industry's strategic and resource fits, summing the attractiveness scores, and determining whether the overall scores for the industries as a group are appealing or not.
E) identifying each industry's average profitability, rating the difficulty of achieving average profitability in each industry, and deciding whether the company's prospects for above-average profitability are attractive or unattractive, industry by industry.
G) A) and E)
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A) The ability to continue using existing processes
B) Cost savings in research and development areas
C) Shorter times in getting new products to market
D) Increased sales in both the parent company and the diversified businesses
E) A greater number of innovative products or processes
G) A) and C)
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A) involve making major changes in a diversified company's business lineup, divesting some businesses and/or acquiring others, so as to put a whole new face on the company's business lineup.
B) entail reducing the scope of diversification to a smaller number of businesses.
C) entail selling off marginal businesses to free up resources for redeployment to the remaining businesses.
D) focus on crafting initiatives to restore a diversified company's money-losing businesses to profitability.
E) focus on broadening the scope of diversification to include a larger number of businesses and boosting the company's growth and profitability.
G) None of the above
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A) make the company better off because it will produce a greater number of core competencies.
B) make the company better off by improving its balance sheet strength and credit rating.
C) make the company better off by spreading shareholder risks across a greater number of businesses and industries.
D) produce a synergistic outcome such that the company's different businesses perform better together than apart and the whole ends up being greater than the sum of the parts.
E) help each business earn exactly what they were earning before coming under the same corporate umbrella.
G) A) and D)
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A) Multinational diversification
B) Restructure the company's business lineup with a combination of divestitures and new acquisitions
C) Craft new initiatives designed to build/enhance the reputation and image of the company
D) Divest some businesses and retrench to a narrower diversification base
E) Broaden the diversification base
G) A) and E)
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A) ongoing declines in the market shares of one or more major business units that are falling prey to more market-savvy competitors.
B) a business lineup that consists of too many slow-growth, declining, low-margin, or competitively weak businesses.
C) an excessive debt burden with interest costs that eat deeply into profitability.
D) ill-chosen acquisitions that haven't lived up to expectations.
E) a business lineup that consists of too many cash cow businesses.
G) C) and E)
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A) the potential for skills transfer in procuring materials.
B) the sharing of resources and capabilities in logistics.
C) the benefits of added collaboration with common supply chain partners.
D) the added leverage gained with shippers when securing volume discounts on incoming parts and components.
E) the increased allocation and allotment of support activities and specialized resources and capabilities.
G) B) and C)
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A) is a generalized resource that can be leveraged in unrelated diversification.
B) is a brand name that can steer a narrow assortment of business types.
C) represents a public disclosure spotlighting the corporate image.
D) represents an overall corporate marker covering its overriding image of sustainability and responsibility.
E) is a specialized resource designed to influence profit growth.
G) A) and D)
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A) Transferring specialized expertise, technological know-how, or other valuable resources and capabilities from one business's value chain to another's
B) Cost sharing between businesses by combining their related value chain activities into a single operation
C) Overhauling and streamlining the operations of the business by refocusing value chain activities toward businesses that can provide a superior job of parenting
D) Exploiting common use of a well-known brand name
E) Sharing other resources (besides brands) that support corresponding value chain activities across businesses
G) A) and C)
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A) When a diversified company has struggled to make certain businesses attractively profitable
B) When a diversified company has too many cash cows
C) When one or more businesses are cash hogs with questionable long-term potential
D) When businesses in once-attractive industries have badly deteriorated
E) When a diversified company has businesses that have little or no strategic or resource fits with the "core" businesses that management wishes to concentrate on
G) B) and E)
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A) When the business is worth more to another company than to the parent company
B) When the business is a cash cow
C) When the business provides valuable strategic or resource fits for another company
D) When shareholders would be better served if the company sells the business for a generous premium
E) When the business lacks the cross-boundary presence of shared values and cultural compatibility
G) A) and B)
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