Question 1

________ 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) All of the above
F) C) and D)

Question 2

Antitakeover tactics include all the following except

Accepted Answer

A)   greenmail.
B)   poison pills.
C)   golden parachutes.
D)  golden handcuffs.E) B) and C)
F) B) and D)

Question 3

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) B) and C)
F) All of the above

Question 4

Cisco Systems, a computer networking firm, has undertaken over 80 acquisitions in the last decade. It uses these acquisitions to acquire ________ that will permit it to expand its productofferings and services through the addition of the acquired technologies.

Accepted Answer

A)   trend information
B)   the global presence
C)   a reputation
D)   valuable resourcesE) C) and D)
F) None of the above

Question 5

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

Question 6

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

Accepted Answer

A) True 
 B)False

Question 7

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) All of the above
F) A) and D)

Question 8

In managing the corporate portfolio, the BCG matrix would suggest that

Accepted Answer

A)   dogs should be invested in to increase market share and become cash cows.
B)   stars are in low growth markets and can provide excess cash to fund other opportunities.
C)   cash cows require substantial cash outlays to maintain market share.
D)   question marks can represent future stars if their market share is increased.E) A) and D)
F) A) and C)

Question 9

A firm should consider vertical integration when

Accepted Answer

A)   the competitive situation is highly volatile.
B)   customer needs are evolving.
C)   the suppliers of raw materials to the firm are unable to maintain quality standards.
D)   the suppliers of the firm willingly cooperate with the firm.E) A) and B)
F) A) and C)

Question 10

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

Question 11

Explain the purpose of antitakeover tactics and provide a specific example of an actual antitakeover tactic.

Accepted Answer

Feedback: Unfriendly or hostile takeover...

Question 12

It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

Accepted Answer

A) True 
 B)False

Question 13

At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as improvingtheir accounting activities and centralizing union negotiations. 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)   related diversification to acquire market power by leveraging core competencies.
C)   unrelated diversification to acquire financial synergies through portfolio management.
D)   unrelated diversification to acquire synergies through corporate restructuring and parenting.E) A) and C)
F) C) and D)

Question 14

Polaris, a manufacturer of snowmobiles, motorcycles, watercraft, and off-road vehicles, shares manufacturing operations across its businesses. It also has a corporate research and development facility and staff departments that support all the Polaris operating divisions. This is an example of creating value by using

Accepted Answer

A)   related diversification to acquire market value by leveraging core competencies.
B)   related diversification to acquire economies of scope by sharing.
C)   unrelated diversification to acquire financial synergies through portfolio management.
D)   relateddiversification to acquire parenting, restructuring, and financial synergies through corporate restructuring and parenting.E) A) and B)
F) A) and C)

Question 15

Vertical integration is attractive when

Accepted Answer

A)   administrative costs are higher than transaction costs.
B)   transaction costs are higher than administrative costs.
C)   transaction costs and administrative costs are equal.
D)   search costs are higher than monitoring costs.E) B) and D)
F) A) and C)

Question 16

Gillette developed the Fusion and Mach 3 shaving systems. These products created superior customer value as a result of the company core competency in research and development.

Accepted Answer

A) True 
 B)False

Question 17

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 in2007

Accepted Answer

A)   expansion
B)   divestiture
C)   acquisition
D)   cost savingsE) A) and B)
F) C) and D)

Question 18

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Accepted Answer

A) True 
 B)False

Question 19

________ is when one firm buys another through a stock purchase, cash or the issuance of debt.

Accepted Answer

A)   An acquisition
B)   A merger
C)   An unrelated diversification
D)   A related diversificationE) B) and C)
F) All of the above

Question 20

According to Michael Porter, there is a tremendous allure to ________. It is the big play, the dramatic gesture. With one stroke of the pen, you can add billions to size, get a front-pagestory, and create excitement in markets.

Accepted Answer

A)   strategic alliances and joint ventures
B)   internal development
C)   mergers and acquisitions
D)   differentiation strategiesE) A) and C)
F) C) and D)

Exam 6: Corporate-Level Strategy Creating Value through Diversification

A firm should consider vertical integration when

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

Gillette developed the Fusion and Mach 3 shaving systems. These products created superior customer value as a result of the company core competency in research and development.

Correct Answer
verified

Antitakeover tactics include all the following except

Correct Answer
verified

________ is when one firm buys another through a stock purchase, cash or the issuance of debt.

Correct Answer
verified

At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as improvingtheir accounting activities and centralizing union negotiations. This is an example of creating value by using

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 in2007

Correct Answer
verified

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

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

Correct Answer
verified

Cisco Systems, a computer networking firm, has undertaken over 80 acquisitions in the last decade. It uses these acquisitions to acquire ________ that will permit it to expand its productofferings and services through the addition of the acquired technologies.

Correct Answer
verified

It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

Correct Answer
verified

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Vertical integration is attractive when

Correct Answer
verified

According to Michael Porter, there is a tremendous allure to ________. It is the big play, the dramatic gesture. With one stroke of the pen, you can add billions to size, get a front-pagestory, and create excitement in markets.

Correct Answer
verified

Explain the purpose of antitakeover tactics and provide a specific example of an actual antitakeover tactic.

Correct Answer
verified
Feedback: Unfriendly or hostile takeover...
View Answer

In managing the corporate portfolio, the BCG matrix would suggest that

Correct Answer
verified

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Correct Answer
verified

Exam 6: Corporate-Level Strategy Creating Value through Diversification

A firm should consider vertical integration when

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

Gillette developed the Fusion and Mach 3 shaving systems. These products created superior customer value as a result of the company core competency in research and development.

Correct AnswerverifiedShow Answer

Antitakeover tactics include all the following except

Correct AnswerverifiedShow Answer

________ is when one firm buys another through a stock purchase, cash or the issuance of debt.

Correct AnswerverifiedShow Answer

At Cooper Industries, there are few similarities in the products it makes or the industries in which it completes. The corporate office adds value through such activities as improvingtheir accounting activities and centralizing union negotiations. This is an example of creating value by using

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 in2007

Correct AnswerverifiedShow Answer

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

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

Correct AnswerverifiedShow Answer

Cisco Systems, a computer networking firm, has undertaken over 80 acquisitions in the last decade. It uses these acquisitions to acquire ________ that will permit it to expand its productofferings and services through the addition of the acquired technologies.

Correct AnswerverifiedShow Answer

It is necessary for a core competence to be difficult to imitate and to be non-substitutable.

Correct AnswerverifiedShow Answer

Research shows that most acquisitions of public corporations result in value creation rather than value destruction.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Vertical integration is attractive when

Correct AnswerverifiedShow Answer

According to Michael Porter, there is a tremendous allure to ________. It is the big play, the dramatic gesture. With one stroke of the pen, you can add billions to size, get a front-pagestory, and create excitement in markets.

Correct AnswerverifiedShow Answer

Explain the purpose of antitakeover tactics and provide a specific example of an actual antitakeover tactic.

Correct AnswerverifiedFeedback: Unfriendly or hostile takeover...View AnswerShow Answer

In managing the corporate portfolio, the BCG matrix would suggest that

Correct AnswerverifiedShow Answer

Greenmail is an offer by a company, threatened by takeover, to offer its stock at a reduced price to a third party.

Correct AnswerverifiedShow Answer

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verified
Feedback: Unfriendly or hostile takeover...
View Answer

Correct Answer
verified

Correct Answer
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