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Exam 6: Corporate-Level Strategy: Creating Value Through Diversification

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Question 31

Multiple Choice

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Creating value within business units can happen when a firm tries to find and acquire either poorly performing firms with unrealized potential or firms in industries on the threshold of significant,positive change.This action is known as

A) restructuring.
B) leveraging core competencies.
C) parenting.
D) sharing activities.

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

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Question 32

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Risk reduction by itself is usually a means to create shareholder value,regardless of the overall diversification strategy of the firm.

A) True
B) False

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Question 33

Multiple Choice

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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

Casio,a giant electronic products producer,synthesizes it abilities in miniaturization,microprocessor design,material science,and ultrathin precision castings to produce digital watches.It uses the same skills to produce card calculators,digital cameras,and other small electronics.These collective skills are known as

If a multinational firm fails to effectively integrate their acquisitions,this can result in

Cooperative relationships such as __________ have potential advantages such as entering new markets,reducing manufacturing (or other) costs in the value chain,and developing and diffusing new technologies.

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.

Core competencies do not create value in a business.

An acquisition that results in ______________ indicates that expectations were not met.

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

All diversification moves,including those involving mergers and acquisitions,erode performance.

According to the text,corporate restructuring includes

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

In large,widely diversified firms,decision making can become slow and remote to market conditions thus creating potential difficulties for successful mergers as evidenced by the Cisco-Flip failure.

Former Merrill Lynch CEO John Thain gave out 4 billion USD in discretionary year-end bonuses just before the company was rescued by Bank of America.This practice demonstrates managerial greed.

Portfolio management matrices are applied to what level of strategy?

Shaw Industries,a giant carpet manufacturer,increases its control over raw materials by producing much of its own polypropylene fiber,a key input to its manufacturing process.This is an example of using

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

Divesting of businesses can accomplish many different objectives,except

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