Question 1

Firms seek to create value from economies of scope through all of the following EXCEPT:

Accepted Answer

A)  activity sharing. 
B)  skill transfers. 
C)  transfers of corporate core competencies. 
D)  de-integration. 
A)  activity sharing. 
B)  skill transfers. 
C)  transfers of corporate core competencies. 
D)  de-integration.

Question 2

The main difference between the related constrained level of diversification and the related linked level of diversification is:

Accepted Answer

A)  the percentage of total organizational profitability that comes from the dominant business. 
B)  the level of resources and activities shared among the businesses. 
C)  whether the diversification is vertical or horizontal. 
D)  whether the diversification is value-creating or value-neutral. 
A)  the percentage of total organizational profitability that comes from the dominant business. 
B)  the level of resources and activities shared among the businesses. 
C)  whether the diversification is vertical or horizontal. 
D)  whether the diversification is value-creating or value-neutral.

Question 3

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be:

Accepted Answer

A)  discounted by investors. 
B)  inflated by investors. 
C)  completely ignored by investors. 
D)  highly valued by investors. 
A)  discounted by investors. 
B)  inflated by investors. 
C)  completely ignored by investors. 
D)  highly valued by investors.

Question 4

Differentiate between corporate- and business-level strategies and give examples of each.

Accepted Answer

A business-level strategy determines how

Question 5

In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs.Which of the following is a value-creating reason to diversify?

Accepted Answer

A)  Economies of scope 
B)  Desire for increased compensation 
C)  Reduced managerial risk 
D)  Low performance 
A)  Economies of scope 
B)  Desire for increased compensation 
C)  Reduced managerial risk 
D)  Low performance

Question 6

Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies.

Accepted Answer

A) True 
 B)False

Question 7

Compared with diversification based on intangible resources, diversification based on financial resources is:

Accepted Answer

A)  less imitable and less likely to create value on a long-term basis. 
B)  more imitable and less likely to create value on a long-term basis. 
C)  less imitable and more likely to create value on a long-term basis. 
D)  more imitable and more likely to create value on a long-term basis. 
A)  less imitable and less likely to create value on a long-term basis. 
B)  more imitable and less likely to create value on a long-term basis. 
C)  less imitable and more likely to create value on a long-term basis. 
D)  more imitable and more likely to create value on a long-term basis.

Question 8

Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing.This excess capacity will be useful in:

Accepted Answer

A)  unrelated diversification. 
B)  related diversification projects. 
C)  corporate restructuring. 
D)  multipoint competition. 
A)  unrelated diversification. 
B)  related diversification projects. 
C)  corporate restructuring. 
D)  multipoint competition.

Question 9

Which of the following resources is more likely to create value in the diversification process?

Accepted Answer

A)  Plant and equipment 
B)  Tacit knowledge 
C)  Excess capacity 
D)  Financial resources 
A)  Plant and equipment 
B)  Tacit knowledge 
C)  Excess capacity 
D)  Financial resources

Question 10

The Walt Disney Company has successfully used related diversification to create value by:

Accepted Answer

A)  diversifying managerial employment risk. 
B)  sharing activities and transferring core competencies. 
C)  reducing risk and securing future cash flow. 
D)  allocating internal capital efficiently and restructuring. 
A)  diversifying managerial employment risk. 
B)  sharing activities and transferring core competencies. 
C)  reducing risk and securing future cash flow. 
D)  allocating internal capital efficiently and restructuring.

Question 11

Backward integration occurs when a company:

Accepted Answer

A)  produces its own inputs. 
B)  owns its own source of distribution of outputs. 
C)  is concentrated in a single industry. 
D)  is divesting unrelated businesses. 
A)  produces its own inputs. 
B)  owns its own source of distribution of outputs. 
C)  is concentrated in a single industry. 
D)  is divesting unrelated businesses.

Question 12

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. 
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 13

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 14

During a financial downturn, a firm may consider diversification as a value-neutral defensive strategy to protect itself against what?

Accepted Answer

A)  Loss of market power 
B)  Managerial employment risk 
C)  Inefficient internal capital allocation 
D)  Uncertain future cash flows 
A)  Loss of market power 
B)  Managerial employment risk 
C)  Inefficient internal capital allocation 
D)  Uncertain future cash flows

Question 15

In an internal capital market, capital allocation can be adjusted according to more specific criteria than is possible with external market allocation of capital.

Accepted Answer

A) True 
 B)False

Question 16

Contract manufacturers who manage their customers' entire product lines and offer services ranging from inventory management to delivery and after-sales services are prime examples of vertical integration.

Accepted Answer

A) True 
 B)False

Question 17

All of Krispy Kreme's revenues come from its one main product, doughnuts.It can be considered a classic example of a firm following a related constrained strategy.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is NOT a limitation directly relating to vertical integration?

Accepted Answer

A)  Bureaucratic costs 
B)  The loss of flexibility through investment in specific technologies 
C)  Capacity balance and coordination problems from changes in demand 
D)  Imitation of core technology by potential competitors 
A)  Bureaucratic costs 
B)  The loss of flexibility through investment in specific technologies 
C)  Capacity balance and coordination problems from changes in demand 
D)  Imitation of core technology by potential competitors

Question 19

Which of the following is a value-reducing reason for diversification?

Accepted Answer

A)  Enhancing the strategic competitiveness of the entire company 
B)  Expanding the business portfolio in order to diversify managerial employment risk 
C)  Gaining market power relative to competitors 
D)  Conforming to antitrust regulation 
A)  Enhancing the strategic competitiveness of the entire company 
B)  Expanding the business portfolio in order to diversify managerial employment risk 
C)  Gaining market power relative to competitors 
D)  Conforming to antitrust regulation

Question 20

Different incentives to diversify sometimes exist, and the quality of a firm's resources may permit only diversification that is value neutral rather than value creating.

Accepted Answer

A) True 
 B)False

Firms seek to create value from economies of scope through all of the following EXCEPT:

The main difference between the related constrained level of diversification and the related linked level of diversification is:

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be:

Differentiate between corporate- and business-level strategies and give examples of each.

In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs.Which of the following is a value-creating reason to diversify?

Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies.

Compared with diversification based on intangible resources, diversification based on financial resources is:

Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing.This excess capacity will be useful in:

Which of the following resources is more likely to create value in the diversification process?

The Walt Disney Company has successfully used related diversification to create value by:

Backward integration occurs when a company:

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

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

During a financial downturn, a firm may consider diversification as a value-neutral defensive strategy to protect itself against what?

In an internal capital market, capital allocation can be adjusted according to more specific criteria than is possible with external market allocation of capital.

Contract manufacturers who manage their customers' entire product lines and offer services ranging from inventory management to delivery and after-sales services are prime examples of vertical integration.

All of Krispy Kreme's revenues come from its one main product, doughnuts.It can be considered a classic example of a firm following a related constrained strategy.

Which of the following is NOT a limitation directly relating to vertical integration?

Which of the following is a value-reducing reason for diversification?

Different incentives to diversify sometimes exist, and the quality of a firm's resources may permit only diversification that is value neutral rather than value creating.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Merger and Acquisition Strategies

International Strategy

Cooperative Strategy

Corporate Governance

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters

Exam 6: Corporate-Level Strategy

Firms seek to create value from economies of scope through all of the following EXCEPT:

The main difference between the related constrained level of diversification and the related linked level of diversification is:

The value of the assets of a firm using a diversification strategy to create both operational and corporate relatedness tend to be:

Differentiate between corporate- and business-level strategies and give examples of each.

In making a decision to diversify, managers should use value-creating reasons or face the risk that their firms will be acquired and they could lose their jobs.Which of the following is a value-creating reason to diversify?

Knowing that their firms could be acquired if they are not managed successfully encourages executives to use value-creating diversification strategies.

Compared with diversification based on intangible resources, diversification based on financial resources is:

Cherrywood Fine Furniture Company finds itself with excess capacity in its plant and equipment for furniture manufacturing.This excess capacity will be useful in:

Which of the following resources is more likely to create value in the diversification process?

The Walt Disney Company has successfully used related diversification to create value by:

Backward integration occurs when a company:

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

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

During a financial downturn, a firm may consider diversification as a value-neutral defensive strategy to protect itself against what?

In an internal capital market, capital allocation can be adjusted according to more specific criteria than is possible with external market allocation of capital.

Contract manufacturers who manage their customers' entire product lines and offer services ranging from inventory management to delivery and after-sales services are prime examples of vertical integration.

All of Krispy Kreme's revenues come from its one main product, doughnuts.It can be considered a classic example of a firm following a related constrained strategy.

Which of the following is NOT a limitation directly relating to vertical integration?

Which of the following is a value-reducing reason for diversification?

Different incentives to diversify sometimes exist, and the quality of a firm's resources may permit only diversification that is value neutral rather than value creating.

Strategic Management and Strategic Competitiveness

The External Environment: Opportunities, Threats, Industry Competition, and Competitor Analysis

The Internal Organization: Resources, Capabilities, Core Competencies, and Competitive Advantages

Business-Level Strategy

Competitive Rivalry and Competitive Dynamics

Merger and Acquisition Strategies

International Strategy

Cooperative Strategy

Corporate Governance

Organizational Structure and Controls

Strategic Leadership

Strategic Entrepreneurship

Filters