Question 1

Corporate-level strategy focuses on _____________.

Accepted Answer

A)   gaining long-term revenue
B)   gaining short-term profits
C)   decreasing business locations
D)   managing investment bankers and their interestsE) None of the above
F) A) and B) A

Question 2

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 3

At times,the only other people who may have benefited from a merger-acquisition were the shareholders of the acquired firms.

Accepted Answer

A) True 
 B)False

Question 4

IBM leverages its competencies in computing technology to provide health care services.This is an example of a core competence being used across dissimilar businesses within the same corporation.

Accepted Answer

A) True 
 B)False

Question 5

Unbalanced capacities that limit cost savings,difficulties in combining specializations,and reduced flexibility are disadvantages associated with ___________.

Accepted Answer

A)   strategic alliances
B)   divestment
C)   horizontal integration
D)   vertical integrationE) None of the above
F) C) and D) D

Question 6

A golden parachute is a prearranged contract with managers specifying that,in the event of a hostile takeover,the target company managers will be paid a significant severance package.

Accepted Answer

A) True 
 B)False

Question 7

Research shows that the vast majority of acquisitions results in value creation rather than value destruction.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements regarding internal development as a means of diversification is FALSE?

Accepted Answer

A)   Many companies use internal development to extend their product or service offers.
B)   An advantage of internal development is that it is generally faster than other means of diversification and firms can benefit from speed in developing new products and services.
C)   The firm is able to capture wealth created without having to share the wealth with alliance partners.
D)   Firms can often develop products or services at a lower cost, if they rely on their own resources instead of external funding.E) A) and D)
F) None of the above

Question 9

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

Accepted Answer

A) True 
 B)False

Question 10

Greenmail is an offer by a company,threatened by takeover,to offer its stock at a reduced price to a third party.

Accepted Answer

A) True 
 B)False

Question 11

The Cisco acquisition of Pure Digital Technologies,the parent of the Flip video camera,failed because __________________.

Accepted Answer

A)   Cisco had valuable competencies
B)   the Flip division of Cisco was slow and less responsive to market pressures
C)   consumers continued to purchase the camera
D)   Cisco had good vision of the marketE) C) and D)
F) None of the above

Question 12

Similar businesses working together or the affiliation of a business with a strong parent can strengthen the bargaining position of a company relative to suppliers and customers.

Accepted Answer

A) True 
 B)False  True

Question 13

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 14

It is not necessary for a core competence to be difficult to imitate or to be nonsubstitutable.

Accepted Answer

A) True 
 B)False

Question 15

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 __________.

Accepted Answer

A)   Cash Cow
B)   Dog
C)   Star
D)   Question MarkE) A) and B)
F) All of the above

Question 16

According to the text,corporate restructuring includes

Accepted Answer

A)   capital restructuring, asset restructuring, and technology restructuring
B)   global diversification, capital restructuring, and asset restructuring
C)   management restructuring, financial restructuring, and procurement restructuring
D)   capital restructuring, asset restructuring, and management restructuringE) A) and C)
F) All of the above

Question 17

The two principal means by which firms achieve synergy through market power are pooled negotiating power and corporate parenting.

Accepted Answer

A) True 
 B)False

Question 18

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)   leveraging core competencies
B)   sharing activities
C)   pooled negotiating power
D)   vertical integrationE) A) and C)
F) A) and B)

Question 19

Which of the following is not part of a good guideline list for managing strategic alliances?

Accepted Answer

A)   establishing a clear understanding between partners
B)   not shortchanging your partner
C)   relying primarily on a contract to make the joint venture work
D)   working hard to ensure a collaborative relationship between partnersE) None of the above
F) B) and C)

Question 20

A car manufacturer controls its own system of dealerships to ensure retail outlets for its products.This is an example of backward integration.

Accepted Answer

A) True 
 B)False

Exam 6: Corporate-Level Strategy: Creatingvalue Through Diversification

Corporate-level strategy focuses on _____________.

Correct AnswerverifiedA

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

At times,the only other people who may have benefited from a merger-acquisition were the shareholders of the acquired firms.

Correct AnswerverifiedShow Answer

IBM leverages its competencies in computing technology to provide health care services.This is an example of a core competence being used across dissimilar businesses within the same corporation.

Correct AnswerverifiedShow Answer

Unbalanced capacities that limit cost savings,difficulties in combining specializations,and reduced flexibility are disadvantages associated with ___________.

Correct AnswerverifiedD

A golden parachute is a prearranged contract with managers specifying that,in the event of a hostile takeover,the target company managers will be paid a significant severance package.

Correct AnswerverifiedShow Answer

Research shows that the vast majority of acquisitions results in value creation rather than value destruction.

Correct AnswerverifiedShow Answer

Which of the following statements regarding internal development as a means of diversification is FALSE?

Correct AnswerverifiedShow Answer

Vertical integration is attractive when market transaction costs are higher than internal administrative costs.

Correct AnswerverifiedShow Answer

Greenmail is an offer by a company,threatened by takeover,to offer its stock at a reduced price to a third party.

Correct AnswerverifiedShow Answer

The Cisco acquisition of Pure Digital Technologies,the parent of the Flip video camera,failed because __________________.

Correct AnswerverifiedShow Answer

Similar businesses working together or the affiliation of a business with a strong parent can strengthen the bargaining position of a company relative to suppliers and customers.

Correct AnswerverifiedTrue

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

It is not necessary for a core competence to be difficult to imitate or to be nonsubstitutable.

Correct AnswerverifiedShow Answer

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 __________.

Correct AnswerverifiedShow Answer

According to the text,corporate restructuring includes

Correct AnswerverifiedShow Answer

The two principal means by which firms achieve synergy through market power are pooled negotiating power and corporate parenting.

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

Which of the following is not part of a good guideline list for managing strategic alliances?

Correct AnswerverifiedShow Answer

A car manufacturer controls its own system of dealerships to ensure retail outlets for its products.This is an example of backward integration.

Correct AnswerverifiedShow Answer

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