Question 1

Which of the following benefits of diversification explains the idea that mergers are more likely when there is an expectation of positive changes in market share?

Accepted Answer

A)  Use of internal capital markets 
B)  Economies of scale and scope 
C)  Economizing on transaction costs 
D)  Diversifying shareholder portfolios 
E)  Identifying undervalued firms 
A)  Use of internal capital markets 
B)  Economies of scale and scope 
C)  Economizing on transaction costs 
D)  Diversifying shareholder portfolios 
E)  Identifying undervalued firms

Question 2

Which of the following practices does not contribute to the strategic fit of Southwest Airlines?

Accepted Answer

A)  No in-flight catering 
B)  Use of multiple types of planes 
C)  No use of congested airports 
D)  Re-engineered boarding process 
E)  No first class section on plane 
A)  No in-flight catering 
B)  Use of multiple types of planes 
C)  No use of congested airports 
D)  Re-engineered boarding process 
E)  No first class section on plane

Question 3

By satisfying which of the following conditions can shareholders prevent management driven acquisitions?

Accepted Answer

A)  If shareholders could determine which acquisitions will lead to increased profits and which will not 
B)  If shareholders could direct management to undertake only those acquisitions that will increase shareholder value 
C)  If shareholders could provide management with the appropriate steps to conduct when performing acquisitions 
D)  a & b 
E)  None of the above 
A)  If shareholders could determine which acquisitions will lead to increased profits and which will not 
B)  If shareholders could direct management to undertake only those acquisitions that will increase shareholder value 
C)  If shareholders could provide management with the appropriate steps to conduct when performing acquisitions 
D)  a & b 
E)  None of the above

Question 4

What type of research looks at the changes in market valuations in response to the announcement of diversifying acquisitions to assess the success of diversification?

Accepted Answer

A)  Event studies 
B)  Valuation studies 
C)  Diversification studies 
D)  Market studies 
E)  Acquisition studies 
A)  Event studies 
B)  Valuation studies 
C)  Diversification studies 
D)  Market studies 
E)  Acquisition studies

Question 5

Why might a large firm actually be at an advantage over a smaller firm with respect to labor?

Accepted Answer

A)  Large generally pay a compensating differential to attract workers 
B)  Worker turnover is generally lower 
C)  Large firms enjoy better scale economies when negotiating with health insurance companies for health benefits 
D)  Large firms are generally less attractive to qualified, upward mobile workers 
E)  Large firms often have to draw workers from a greater distance to fill their ranks 
A)  Large generally pay a compensating differential to attract workers 
B)  Worker turnover is generally lower 
C)  Large firms enjoy better scale economies when negotiating with health insurance companies for health benefits 
D)  Large firms are generally less attractive to qualified, upward mobile workers 
E)  Large firms often have to draw workers from a greater distance to fill their ranks

Question 6

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Accepted Answer

A)  Legal department 
B)  Corporate board 
C)  Mergers and acquisitions program 
D)  Firm bonus schedule 
E)  Corporate governance 
A)  Legal department 
B)  Corporate board 
C)  Mergers and acquisitions program 
D)  Firm bonus schedule 
E)  Corporate governance

Question 7

Which of the following is not a reason a supplier might seek to sell in bulk?

Accepted Answer

A)  Each sale incurs a fixed cost in writing a contract 
B)  The purchaser is likely to switch over a small price due to the gains over the large number of units ordered 
C)  Each sale involves setting up a different production run 
D)  The cost of delivery is a fixed on a per unit basis 
E)  The supplier fears uneven sales 
A)  Each sale incurs a fixed cost in writing a contract 
B)  The purchaser is likely to switch over a small price due to the gains over the large number of units ordered 
C)  Each sale involves setting up a different production run 
D)  The cost of delivery is a fixed on a per unit basis 
E)  The supplier fears uneven sales

Question 8

What measure,that depends on how much of a firm's revenues are attributable to product market activities that have shared technological characteristics,production characteristics,or distribution channels,is used to determine how diversified a firm is at a given time?

Accepted Answer

A)  Integration level 
B)  Rumelt score 
C)  Conglomerate level 
D)  Activity share 
E)  Relatedness 
A)  Integration level 
B)  Rumelt score 
C)  Conglomerate level 
D)  Activity share 
E)  Relatedness

Question 9

Examining which of the following is broadly considered one of the easiest ways to measure diversifying activity?

Accepted Answer

A)  Joint Ventures 
B)  Mergers and acquisitions 
C)  Internal Business Development 
D)  Strategic Alliances 
E)  Collaborative agreements 
A)  Joint Ventures 
B)  Mergers and acquisitions 
C)  Internal Business Development 
D)  Strategic Alliances 
E)  Collaborative agreements

Question 10

Which of the following is a characteristic of economies of scale?

Accepted Answer

A)  The average cost declines as output increases 
B)  The average cost increases as output increases 
C)  The average cost remains constant as output increases 
D)  The average costs are cheaper when a firm produces a wider variety of goods 
E)  The average cost curve takes the form of a U-shape 
A)  The average cost declines as output increases 
B)  The average cost increases as output increases 
C)  The average cost remains constant as output increases 
D)  The average costs are cheaper when a firm produces a wider variety of goods 
E)  The average cost curve takes the form of a U-shape

Which of the following benefits of diversification explains the idea that mergers are more likely when there is an expectation of positive changes in market share?

Which of the following practices does not contribute to the strategic fit of Southwest Airlines?

By satisfying which of the following conditions can shareholders prevent management driven acquisitions?

What type of research looks at the changes in market valuations in response to the announcement of diversifying acquisitions to assess the success of diversification?

Why might a large firm actually be at an advantage over a smaller firm with respect to labor?

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Which of the following is not a reason a supplier might seek to sell in bulk?

What measure,that depends on how much of a firm's revenues are attributable to product market activities that have shared technological characteristics,production characteristics,or distribution channels,is used to determine how diversified a firm is at a given time?

Examining which of the following is broadly considered one of the easiest ways to measure diversifying activity?

Which of the following is a characteristic of economies of scale?

The Power of Principles: an Historical Perspective

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters

Exam 2: Economies of Scale and Scope

Which of the following benefits of diversification explains the idea that mergers are more likely when there is an expectation of positive changes in market share?

Which of the following practices does not contribute to the strategic fit of Southwest Airlines?

By satisfying which of the following conditions can shareholders prevent management driven acquisitions?

What type of research looks at the changes in market valuations in response to the announcement of diversifying acquisitions to assess the success of diversification?

Why might a large firm actually be at an advantage over a smaller firm with respect to labor?

What institution within a firm must fail on some level for managers to be motivated to acquire another firm for the purposes of increasing their own compensation,shielding themselves against risk,or gaining prominence by running a larger firm?

Which of the following is not a reason a supplier might seek to sell in bulk?

What measure,that depends on how much of a firm's revenues are attributable to product market activities that have shared technological characteristics,production characteristics,or distribution channels,is used to determine how diversified a firm is at a given time?

Examining which of the following is broadly considered one of the easiest ways to measure diversifying activity?

Which of the following is a characteristic of economies of scale?

The Power of Principles: an Historical Perspective

The Vertical Boundaries of the Firm

Integration and Its Alternatives

Competitors and Competition

Entry and Exit

The Dynamics Competing Across Time

Industry Analysis

Strategic Positioning for Competitive Advantage

Information and Value Creation

Sustaining Competitive Advantage

Performance Measurement and Incentives

Strategy and Structure

Environment, power, and Culture

Filters