Question 1

ConAgra,a diversified food producer,increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions.This is an example of using

Accepted Answer

A)  related diversification to acquire economies of scope by leveraging pooled negotiating power.
B)  related diversification to acquire market power by leveraging pooled negotiating power.
C)  unrelated diversification to acquire financial synergies through portfolio management.
D)  unrelated diversification to acquire parenting,restructuring,and financial synergies through restructuring and parenting.E) A) and C)
F) C) and D)

Question 2

Research shows that a key competence of high-performance diversified firms is the ability to

Accepted Answer

A)  hide excess capital.
B)  efficiently dispose of excess capital.
C)  effectively allocate financial capital.
D)  invest internationally.E) A) and C)
F) A) and B)

Question 3

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 4

Transaction costs include all the following costs except

Accepted Answer

A)  monitoring costs.
B)  negotiating costs.
C)  search costs.
D)  agency costs.E) A) and D)
F) None of the above

Question 5

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) A) and B)
F) B) and C)

Question 6

Asset restructuring involves the sale of ________ assets,or even whole lines of businesses that are peripheral.

Accepted Answer

A)  productive
B)  efficient
C)  unproductive
D)  inefficientE) B) and C)
F) B) and D)

Question 7

Which of the following is not a reason for merger and acquisition failures?

Accepted Answer

A)  The acquiring company pays a large premium for the common stock of the target company.
B)  Top executives act in their best interests rather than those of the shareholders.
C)  The acquisition leads to value creation.
D)  The acquired company assets are poorly integrated into the acquiring company business lines.E) C) and D)
F) A) and B)

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 D)
F) A) and C)

Question 9

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) A) and B)
F) B) and C)

Question 10

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 11

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 businesses listed 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) B) and C)

Question 12

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.

Accepted Answer

A)  costs
B)  employees
C)  discontinuities
D)  synergiesE) B) and D)
F) B) and C)

Question 13

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) A) and B)
F) A) and C)

Question 14

If a multinational firm is unable to understand how the assets of the acquired company would fit with their own lines of business,this can lead to

Accepted Answer

A)  expansion.
B)  divestiture.
C)  cost savings.
D)  acquisition.E) A) and B)
F) A) and C)

Question 15

In the BCG Growth Share Matrix,the suggested strategy for stars is to

Accepted Answer

A)  milk them to finance other businesses.
B)  invest large sums to gain a good market share.
C)  maintain position and after the market growth slows use the business to provide cash flow.
D)  not invest in them and to shift cash flow to other businesses.E) B) and C)
F) A) and D)

Question 16

In 2012,Microsoft admitted to a major ________ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm,aQuantive,that it purchased in 2007.

Accepted Answer

A)  expansion
B)  divestiture
C)  acquisition
D)  cost savingsE) B) and C)
F) None of the above

Question 17

When using a BCG matrix,a ________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.

Accepted Answer

A)  star
B)  dog
C)  cash cow
D)  question markE) All of the above
F) B) and C)

Question 18

________ is when the corporate office helps subsidiaries make wise choices in their own acquisitions,divestures,and new ventures,thereby creating value within business units.

Accepted Answer

A)  Parenting
B)  Restructuring
C)  Leveraging core competencies
D)  Increasing market powerE) A) and B)
F) None of the above

Question 19

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) None of the above
F) A) and D)

Question 20

Portfolio management matrices are applied to what level of strategy?

Accepted Answer

A)  departmental level
B)  business level
C)  corporate level
D)  international levelE) None of the above
F) B) and D)

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

ConAgra,a diversified food producer,increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions.This is an example of using

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

The term "golden parachute" refers to

Correct Answer
verified

Firms have several choices of diversification initiatives that can be used to create value.Which of the following is not one of them?

Correct Answer
verified

Portfolio management matrices are applied to what level of strategy?

Correct Answer
verified

Which of the following is not a reason for merger and acquisition failures?

Correct Answer
verified

________ is when the corporate office helps subsidiaries make wise choices in their own acquisitions,divestures,and new ventures,thereby creating value within business units.

Correct Answer
verified

When using a BCG matrix,a ________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.

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

In the BCG Growth Share Matrix,the suggested strategy for stars is to

Correct Answer
verified

If a multinational firm is unable to understand how the assets of the acquired company would fit with their own lines of business,this can lead to

Correct Answer
verified

Asset restructuring involves the sale of ________ assets,or even whole lines of businesses that are peripheral.

Correct Answer
verified

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 Answer
verified

Portfolio models are used to assist a firm in

Correct Answer
verified

In 2012,Microsoft admitted to a major ________ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm,aQuantive,that it purchased in 2007.

Correct Answer
verified

Research shows that a key competence of high-performance diversified firms is the ability to

Correct Answer
verified

Transaction costs include all the following costs except

Correct Answer
verified

Correct Answer
verified

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

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

ConAgra,a diversified food producer,increases its power over suppliers by centrally purchasing huge quantities of packaging materials for all its food divisions.This is an example of using

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 in their 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

The term "golden parachute" refers to

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

Portfolio management matrices are applied to what level of strategy?

Correct AnswerverifiedShow Answer

Which of the following is not a reason for merger and acquisition failures?

Correct AnswerverifiedShow Answer

________ is when the corporate office helps subsidiaries make wise choices in their own acquisitions,divestures,and new ventures,thereby creating value within business units.

Correct AnswerverifiedShow Answer

When using a BCG matrix,a ________ is a business that currently holds a large market share in a rapidly growing market and has minimal or negative cash flow.

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

In the BCG Growth Share Matrix,the suggested strategy for stars is to

Correct AnswerverifiedShow Answer

If a multinational firm is unable to understand how the assets of the acquired company would fit with their own lines of business,this can lead to

Correct AnswerverifiedShow Answer

Asset restructuring involves the sale of ________ assets,or even whole lines of businesses that are peripheral.

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

Portfolio models are used to assist a firm in

Correct AnswerverifiedShow Answer

In 2012,Microsoft admitted to a major ________ mistake when it wrote off essentially the entire 6.2 billion USD it paid for a digital advertising firm,aQuantive,that it purchased in 2007.

Correct AnswerverifiedShow Answer

Research shows that a key competence of high-performance diversified firms is the ability to

Correct AnswerverifiedShow Answer

Transaction costs include all the following costs except

Correct AnswerverifiedShow Answer

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 AnswerverifiedShow Answer

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verified

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