Question 1

Transaction costs include all the following costs except

Accepted Answer

A)   monitoring costs.
B)   negotiating costs.
C)   search costs.
D)   agency costs.E) All of the above
F) B) and C)

Question 2

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation, it must at least create superior customer value and it must be difficultto imitate.

Accepted Answer

A) True 
 B)False  True

Question 3

The primary means by which a firm can diversify are ________, ________, and ________.

Accepted Answer

A)   mergers and acquisitions; differentiation; overall cost leadership
B)   mergers and acquisitions; joint ventures and strategic alliances; internal development
C)   joint ventures and strategic alliances; integration of value chain activities; acquiring human capital
D)   mergers and acquisitions; internal development; differentiationE) B) and C)
F) C) and D)

Question 4

According to the text, corporate restructuring includes

Accepted Answer

A)   capital restructuring, asset restructuring, and technology restructuring.
B)   capital restructuring, asset restructuring, and management restructuring.
C)   management restructuring, financial restructuring, and procurement restructuring.
D)   global diversification, capital restructuring, and asset restructuring.E) A) and B)
F) None of the above

Question 5

Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

Accepted Answer

A) True 
 B)False

Question 6

Proctor and Gamble is a large multinational organization that has many business sharing distribution resources. Diversification strategies take advantage of the ________ that exist intheir organization.

Accepted Answer

A)   costs
B)   employees
C)   discontinuities
D)   synergiesE) A) and B)
F) All of the above

Question 7

Portfolio models such as the BCG Portfolio matrix are limited in value because they only compare the SBU on four dimensions.

Accepted Answer

A) True 
 B)False

Question 8

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
B)   using related diversification to acquire market power
C)   using unrelated diversification to acquire financial synergies
D)   using related diversification to acquire parenting and restructuring synergiesE) A) and B)
F) B) and D)

Question 9

Through joint ventures, firms can directly acquire the assets and competencies of other firms.

Accepted Answer

A) True 
 B)False

Question 10

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 ongoing 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 large.E) A) and C)
F) All of the above

Question 11

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Accepted Answer

A) True 
 B)False

Question 12

3M leverages its competencies in adhesives technologies to many industries, including automotive, construction, and telecommunications. This is an example of creating value by using

Accepted Answer

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

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) A) and D)
F) A) and C)

Question 14

In 2014, Apple purchased Beats Electronics for billion USD. While Apple valued the product portfolio of Beats, its primary aim was to pull the founders of Beats, Jimmy Iovine and Dr. Dre (aka Andrew Young) , into the Apple family. This is an example of acquiring firms using acquisitions to acquire

Accepted Answer

A)   critical financial resources.
B)   critical human capital.
C)   critical reputation.
D)   critical land resources.E) None of the above
F) A) and D)

Question 15

The Coca-Cola acquisition of its bottlers failed because

Accepted Answer

A)   Coca-Cola had valuable competencies.
B)   the bottling business required too much capital investment and time.
C)   consumers consumed less because the distribution channel changed.
D)   Coca-Cola spent less money on the distribution of concentrates and syrups.E) None of the above
F) All of the above

Question 16

Portfolio models are used to assist a firm in

Accepted Answer

A)   achieving a portfolio of businesses.
B)   unbalancing its portfolio of businesses.
C)   achieving a balanced portfolio of businesses.
D)   generating excess cash.E) B) and C)
F) A) and D) C

Question 17

Restructuring requires the corporate office to find either exceptionally performing firms with realized potential or firms in industries on the threshold of significant, negative change.

Accepted Answer

A) True 
 B)False

Question 18

Diversification initiatives include all the following except

Accepted Answer

A)   mergers and acquisitions.
B)   strategic alliances.
C)   shareholder development.
D)   joint ventures.E) A) and D)
F) B) and C)

Question 19

For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?

Accepted Answer

A)   The competence must help the business gain strength relative to its competition.
B)   The new business must be similar to existing businesses to benefit from a core competence.
C)   The new business must have an established large market share.
D)   The collection of competencies should be unique, so that they cannot be easily imitated.E) B) and C)
F) A) and D)

Question 20

Which of the following is not a way a corporation tries to create shareholder value in using portfolio strategy approaches?

Accepted Answer

A)   Portfolio analysis provides a snapshot of the businesses in the portfolio of the corporation.
B)   The expertise and analytical resources in the corporate office provide guidance in determining firm attractiveness for acquisition.
C)   The corporate office is not able to provide financial resources to the business units on favorable terms.
D)   The corporate office can provide high-quality review and coaching for the individual businesses.E) All of the above
F) A) and D)

Exam 6: Corporate-Level Strategy Creating Value through Diversification

Transaction costs include all the following costs except

Correct AnswerverifiedShow Answer

For a core competency to create value and provide a viable basis for synergy among the businesses in a corporation, it must at least create superior customer value and it must be difficultto imitate.

Correct AnswerverifiedTrue

The primary means by which a firm can diversify are ________, ________, and ________.

Correct AnswerverifiedShow Answer

According to the text, corporate restructuring includes

Correct AnswerverifiedShow Answer

Portfolio management should be considered as the primary basis for formulating corporate-level strategies.

Correct AnswerverifiedShow Answer

Proctor and Gamble is a large multinational organization that has many business sharing distribution resources. Diversification strategies take advantage of the ________ that exist intheir organization.

Correct AnswerverifiedShow Answer

Portfolio models such as the BCG Portfolio matrix are limited in value because they only compare the SBU on four dimensions.

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

Through joint ventures, firms can directly acquire the assets and competencies of other firms.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The Hewlett-Packard and Autonomy merger in 2011 is an example of a successful merger.

Correct AnswerverifiedShow Answer

3M leverages its competencies in adhesives technologies to many industries, including automotive, construction, and telecommunications. This is an example of creating value by using

Correct AnswerverifiedC

A cash cow, in the BCG framework, refers to a business that has

Correct AnswerverifiedShow Answer

In 2014, Apple purchased Beats Electronics for billion USD. While Apple valued the product portfolio of Beats, its primary aim was to pull the founders of Beats, Jimmy Iovine and Dr. Dre (aka Andrew Young) , into the Apple family. This is an example of acquiring firms using acquisitions to acquire

Correct AnswerverifiedShow Answer

The Coca-Cola acquisition of its bottlers failed because

Correct AnswerverifiedShow Answer

Portfolio models are used to assist a firm in

Correct AnswerverifiedC

Restructuring requires the corporate office to find either exceptionally performing firms with realized potential or firms in industries on the threshold of significant, negative change.

Correct AnswerverifiedShow Answer

Diversification initiatives include all the following except

Correct AnswerverifiedShow Answer

For a core competence to be a viable basis for the corporation strengthening a new business unit, there are three requirements. Which one of the following is not one of these requirements?

Correct AnswerverifiedShow Answer

Which of the following is not a way a corporation tries to create shareholder value in using portfolio strategy approaches?

Correct AnswerverifiedShow Answer

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The primary means by which a firm can diversify are , , and .

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C

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C

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