Question 1

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

Accepted Answer

A) True 
 B)False

Question 2

An acquisition that results in ______________ indicates that expectations were not met.

Accepted Answer

A)  expansion
B)  divestiture
C)  cost savings
D)  increased salesE) A) and B)
F) All of the above

Question 3

When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

Accepted Answer

A) True 
 B)False

Question 4

Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate research and development facility and staff departments that support all of the Polaris operating divisions. This is an example of using

Accepted Answer

A)  related diversification to acquire market value by leveraging core competencies.
B)  related diversification to acquire economies of scope by sharing.
C)  unrelated diversification to acquire financial synergies through portfolio management.
D)  related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.E) A) and B)
F) A) and C)

Question 5

Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them?

Accepted Answer

A)  using related diversification to acquire economies of scope leveraging pooled negotiating power
B)  using related diversification to acquire market power by leveraging core competencies
C)  using unrelated diversification to acquire financial synergies through portfolio management
D)  using related diversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parentingE) A) and C)
F) A) and B)

Question 6

Lionsgate (a Canadian-American entertainment company)  and Alibaba (a Chinese e-commerce company)  created _________ to open the Chinese market for the Lionsgate streaming shows and movies. Alibaba profits by getting access to content to increase demand for its own set-top media boxes.

Accepted Answer

A)  a joint venture
B)  a merger
C)  an acquisition
D)  a strategic allianceE) A) and B)
F) A) and D)

Question 7

An advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with its partners.

Accepted Answer

A) True 
 B)False

Question 8

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Accepted Answer

A) True 
 B)False

Question 9

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all of its food divisions. This is an example of using

Accepted Answer

A)  related diversification to acquire economies of scope by leveraging pooled negotiating power.
B)  related diversification to acquire market power by leveraging pooled negotiating power.
C)  unrelated diversification to acquire financial synergies through portfolio management.
D)  unrelated diversification to acquire parenting, restructuring, and financial synergies through restructuring and parenting.E) None of the above
F) B) and D)

Question 10

Many leading high-tech firms such as Google, Apple, and Intel have dramatically enhanced their revenues, profits, and market values through a wide variety of diversification initiatives. Which of the following is not such an initiative?

Accepted Answer

A)  acquisitions
B)  strategic alliances
C)  stockholder enhancement
D)  joint venturesE) A) and B)
F) C) and D)

Question 11

Many acquisitions ultimately result in divestiture.

Accepted Answer

A) True 
 B)False

Question 12

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

Accepted Answer

A)  vertical integration.
B)  sharing activities.
C)  pooled negotiating power.
D)  leveraging core competencies.E) B) and C)
F) None of the above

Question 13

A Cash Cow, in the BCG framework, refers to a business that has

Accepted Answer

A)  high market growth and relatively high market share.
B)  relatively low market share and low market growth.
C)  relatively low market share and high market growth.
D)  low market growth and relatively high market share.E) B) and C)
F) A) and B)

Question 14

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as

Accepted Answer

A)  parenting.
B)  restructuring.
C)  leveraging core competencies.
D)  increasing market power.E) A) and B)
F) A) and C)

Question 15

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

Accepted Answer

A)  products use similar distribution channels.
B)  similarity required for sharing core competencies must be in the value chain.
C)  target market is the same, even if the products are very different.
D)  methods of production are the same.E) A) and D)
F) B) and C)

Question 16

Unfriendly or hostile takeovers always occur when the stock of the company becomes undervalued.

Accepted Answer

A) True 
 B)False

Question 17

In a study of 270 international mergers between 2000 and 2003 it was found that sales growth increased, earnings growth increased, and market valuations increased overall for the merged companies.

Accepted Answer

A) True 
 B)False

Question 18

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 on-going 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 expensive.E) A) and C)
F) A) and B)

Question 19

Casio, a giant electronic products producer, synthesizes it abilities in miniaturization, microprocessor design, material science, and ultrathin precision castings to produce digital watches. It uses the same skills to produce card calculators, digital cameras, and other small electronics. These collective skills are known as

Accepted Answer

A)  core competencies.
B)  strategic resources.
C)  shared activities.
D)  economies of scope.E) A) and C)
F) None of the above

Question 20

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

Accepted Answer

A) True 
 B)False

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

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

Correct Answer
verified

Unfriendly or hostile takeovers always occur when the stock of the company becomes undervalued.

Correct Answer
verified

Many leading high-tech firms such as Google, Apple, and Intel have dramatically enhanced their revenues, profits, and market values through a wide variety of diversification initiatives. Which of the following is not such an initiative?

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

A Cash Cow, in the BCG framework, refers to a business that has

Correct Answer
verified

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

Correct Answer
verified

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all of its food divisions. This is an example of using

Correct Answer
verified

An advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with its partners.

Correct Answer
verified

Correct Answer
verified

An acquisition that results in ______________ indicates that expectations were not met.

Correct Answer
verified

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

Correct Answer
verified

Many acquisitions ultimately result in divestiture.

Correct Answer
verified

In a study of 270 international mergers between 2000 and 2003 it was found that sales growth increased, earnings growth increased, and market valuations increased overall for the merged companies.

Correct Answer
verified

Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them?

Correct Answer
verified

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as

Correct Answer
verified

Lionsgate (a Canadian-American entertainment company) and Alibaba (a Chinese e-commerce company) created _________ to open the Chinese market for the Lionsgate streaming shows and movies. Alibaba profits by getting access to content to increase demand for its own set-top media boxes.

Correct Answer
verified

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Correct Answer
verified

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

Correct Answer
verified

When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

Correct Answer
verified

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

One of the obligatory aspects of strategic alliances is the dependence on written contracts to delimit responsibilities and enforce compliance.

Correct AnswerverifiedShow Answer

Unfriendly or hostile takeovers always occur when the stock of the company becomes undervalued.

Correct AnswerverifiedShow Answer

Many leading high-tech firms such as Google, Apple, and Intel have dramatically enhanced their revenues, profits, and market values through a wide variety of diversification initiatives. Which of the following is not such an initiative?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A Cash Cow, in the BCG framework, refers to a business that has

Correct AnswerverifiedShow Answer

Corporate-level strategy focuses on gaining short-term revenue through managing operations in multiple businesses.

Correct AnswerverifiedShow Answer

ConAgra, a diversified food producer, increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all of its food divisions. This is an example of using

Correct AnswerverifiedShow Answer

An advantage of a firm entering into a strategic alliance is that it does not have to share the wealth with its partners.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An acquisition that results in ______________ indicates that expectations were not met.

Correct AnswerverifiedShow Answer

Shaw Industries, a giant carpet manufacturer, increases its control over raw materials by producing much of its own polypropylene fiber, a key input into its manufacturing process. This is an example of

Correct AnswerverifiedShow Answer

Many acquisitions ultimately result in divestiture.

Correct AnswerverifiedShow Answer

In a study of 270 international mergers between 2000 and 2003 it was found that sales growth increased, earnings growth increased, and market valuations increased overall for the merged companies.

Correct AnswerverifiedShow Answer

Firms have several choices of diversification initiatives that can be used to create value. Which of the following is not one of them?

Correct AnswerverifiedShow Answer

Creating value within business units can happen when the corporate office helps subsidiaries make wise choices in their own acquisitions, divestures, and new ventures. This is known as

Correct AnswerverifiedShow Answer

Lionsgate (a Canadian-American entertainment company) and Alibaba (a Chinese e-commerce company) created _________ to open the Chinese market for the Lionsgate streaming shows and movies. Alibaba profits by getting access to content to increase demand for its own set-top media boxes.

Correct AnswerverifiedShow Answer

The acquisition of two or more counter-cyclical businesses is an example of using diversification to reduce risk.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When firms diversify into related businesses, the primary potential benefits come from horizontal relationships, which are businesses sharing intangible and tangible resources.

Correct AnswerverifiedShow Answer

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