Question 1

Capital restructuring involves changing the ________ mix.

Accepted Answer

A)   cash
B)   human resource
C)   debt-equity
D)   managementE) C) and D)
F) A) and C)

Question 2

Factors that directly affect the merger and acquisition environment include all the following except

Accepted Answer

A)   general economic conditions.
B)   level of optimism about the future.
C)   currency fluctuations.
D)   managerial style.E) B) and D)
F) C) and D)

Question 3

Diversified public corporations, such as Berkshire Hathaway and Virgin Group, create value through management expertise by improving plans and budgets. This is an example of a relateddiversification strategy.

Accepted Answer

A) True 
 B)False

Question 4

The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creatingvalue by using

Accepted Answer

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

Question 5

AOL purchased Time Warner for 114 billion USD in 2001. By 2003, AOL Time Warner had lost 150 billion USD in market valuation. This is an example of a

Accepted Answer

A)   good expansion.
B)   reasonable divestiture.
C)   cost savings strategy.
D)   failed acquisition.E) A) and C)
F) B) and D)

Question 6

When management uses common production facilities or purchasing procedures to distribute different but related products, they are

Accepted Answer

A)   building on core competencies.
B)   achieving process gains.
C)   using portfolio analysis.
D)   sharing activities.E) A) and C)
F) B) and D)

Question 7

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

Accepted Answer

A)   products use similar distribution channels.
B)   value chains of the firm be similar enough in at least one way to allow for the leveraging of the core competencies of the firm.
C)   target market is the same, even if the products are very different.
D)   methods of production are the same.E) A) and B)
F) None of the above

Question 8

________ diversification is when a firm enters a different business that has little horizontal interaction with other businesses of a firm.

Accepted Answer

A)   Horizontal
B)   Synergistic
C)   Related
D)   UnrelatedE) A) and B)
F) A) and D)

Question 9

One of the reasons it is said that only the investment banker wins when a company is acquired is that they

Accepted Answer

A)   assure the newly acquired company will be successful.
B)   continue to work with the two companies involved.
C)   collect huge up-front fees regardless of the outcome afterwards.
D)   monitor the progress of both companies for long term growth.E) B) and C)
F) None of the above

Question 10

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders.

Accepted Answer

A) True 
 B)False

Question 11

In recent years, many high-tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

Accepted Answer

A) True 
 B)False

Question 12

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.
C)   The firm can 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) C) and D)
F) A) and C)

Question 13

Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using

Accepted Answer

A)   deconstruction expertise.
B)   parenting expertise.
C)   excess personnel.
D)   increased market positioning.E) B) and C)
F) A) and B)

Question 14

The term "golden parachute" refers to

Accepted Answer

A)   a clause requiring that huge dividend payments be made upon takeover.
B)   pay given to executives fired because of a takeover.
C)   financial inducements offered by a threatened firm to stop a hostile suitor from acquiring it.
D)   managers of a firm in a hostile takeover approaching a third party about making the acquisition.E) A) and B)
F) A) and C)

Question 15

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through ________ and ________ can provide.

Accepted Answer

A)   strategic alliances; joint ventures
B)   strategic alliances; mergers
C)   mergers; acquisitions
D)   mergers; joint venturesE) B) and C)
F) B) and D)

Question 16

Common steps in management restructuring include all the following except

Accepted Answer

A)   tight financial control.
B)   rewards based on meeting short- to medium-term performance goals.
C)   penalties for missing short- to medium-term performance goals.
D)   reduction in the number of middle-level managers.E) A) and D)
F) All of the above

Question 17

Firms that choose to diversify through internal development must develop ________ that allow them to move ________ from initial opportunity recognition to market introduction.

Accepted Answer

A)   strategies; slowly
B)   capabilities; quickly
C)   capabilities; slowly
D)   strategies; quicklyE) C) and D)
F) A) and B)

Question 18

When Cabot Corporation used the BCG matrix to evaluate its carbon black manufacturing business, the model led them to move away from ________ and to diversify into unrelated businesseslisted as stars by the model. This resulted in a decline on return on assets. They eventually returned to carbon black manufacturing and divested the unrelated businesses; their 2016 revenue was 2.4 billion USD.

Accepted Answer

A)   the dog quadrant
B)   its core market
C)   the question mark quadrant
D)   semiconductor manufacturingE) A) and D)
F) None of the above

Question 19

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 isan example of

Accepted Answer

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

Question 20

Explain potential benefits that can be gained from vertical (or hierarchicalrelationships when corporations use unrelated diversification to increase value.

Accepted Answer

Feedback: Potential benefits can be gain...

Exam 6: Corporate-Level Strategy Creating Value through Diversification

Firms that choose to diversify through internal development must develop that allow them to move from initial opportunity recognition to market introduction.

Correct Answer
verified

When management uses common production facilities or purchasing procedures to distribute different but related products, they are

Correct Answer
verified

The term "golden parachute" refers to

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

One of the reasons it is said that only the investment banker wins when a company is acquired is that they

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 isan example of

Correct Answer
verified

Explain potential benefits that can be gained from vertical (or hierarchicalrelationships when corporations use unrelated diversification to increase value.

Correct Answer
verified
Feedback: Potential benefits can be gain...
View Answer

________ diversification is when a firm enters a different business that has little horizontal interaction with other businesses of a firm.

Correct Answer
verified

Correct Answer
verified

Capital restructuring involves changing the ________ mix.

Correct Answer
verified

AOL purchased Time Warner for 114 billion USD in 2001. By 2003, AOL Time Warner had lost 150 billion USD in market valuation. This is an example of a

Correct Answer
verified

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through and can provide.

Correct Answer
verified

Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using

Correct Answer
verified

Diversified public corporations, such as Berkshire Hathaway and Virgin Group, create value through management expertise by improving plans and budgets. This is an example of a relateddiversification strategy.

Correct Answer
verified

Common steps in management restructuring include all the following except

Correct Answer
verified

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders.

Correct Answer
verified

The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creatingvalue by using

Correct Answer
verified

Factors that directly affect the merger and acquisition environment include all the following except

Correct Answer
verified

In recent years, many high-tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

Correct Answer
verified

Exam 6: Corporate-Level Strategy Creating Value through Diversification

Firms that choose to diversify through internal development must develop ________ that allow them to move ________ from initial opportunity recognition to market introduction.

Correct AnswerverifiedShow Answer

When management uses common production facilities or purchasing procedures to distribute different but related products, they are

Correct AnswerverifiedShow Answer

The term "golden parachute" refers to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

One of the reasons it is said that only the investment banker wins when a company is acquired is that they

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 isan example of

Correct AnswerverifiedShow Answer

Explain potential benefits that can be gained from vertical (or hierarchicalrelationships when corporations use unrelated diversification to increase value.

Correct AnswerverifiedFeedback: Potential benefits can be gain...View AnswerShow Answer

________ diversification is when a firm enters a different business that has little horizontal interaction with other businesses of a firm.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Capital restructuring involves changing the ________ mix.

Correct AnswerverifiedShow Answer

AOL purchased Time Warner for 114 billion USD in 2001. By 2003, AOL Time Warner had lost 150 billion USD in market valuation. This is an example of a

Correct AnswerverifiedShow Answer

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through ________ and ________ can provide.

Correct AnswerverifiedShow Answer

Diversified public corporations such as Berkshire Hathaway and Virgin Group are examples of companies that create value using

Correct AnswerverifiedShow Answer

Diversified public corporations, such as Berkshire Hathaway and Virgin Group, create value through management expertise by improving plans and budgets. This is an example of a relateddiversification strategy.

Correct AnswerverifiedShow Answer

Common steps in management restructuring include all the following except

Correct AnswerverifiedShow Answer

With unrelated diversification, potential benefits can be gained from vertical or hierarchical relationships; that is, the creation of synergies from the interaction of the corporate office with outside stakeholders.

Correct AnswerverifiedShow Answer

The corporate office of Novartis, formerly Ciba-Geigy, acts to improve many key activities, including resource allocation and reward and evaluation systems. This is an example of creatingvalue by using

Correct AnswerverifiedShow Answer

Factors that directly affect the merger and acquisition environment include all the following except

Correct AnswerverifiedShow Answer

In recent years, many high-tech firms such as Priceline.com have suffered from the negative impact of uncontrolled growth.

Correct AnswerverifiedShow Answer

Firms that choose to diversify through internal development must develop that allow them to move from initial opportunity recognition to market introduction.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Feedback: Potential benefits can be gain...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Internal development may be time consuming and, therefore, firms may forfeit the benefits of speed that growth through and can provide.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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