Question 1

According to BNP Paribas chief economist,Julia Coronado,when businesses feel confident about the future they are more aggressive in looking for ways to grow and expand their operations.You would expect the volume of mergers and acquisitions to ________ during this period.

Accepted Answer

A)   decrease
B)   remain stagnant
C)   increase
D)   fluctuate downwardE) B) and C)
F) A) and B)

Question 2

Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms.Using examples to support your response,give some explanations for this observation.

Accepted Answer

Feedback: Research shows that a majority...

Question 3

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

Accepted Answer

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

Question 4

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

Question 5

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

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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 8

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-page story,and create excitement in markets.

Accepted Answer

A)   strategic alliances and joint ventures
B)   internal development
C)   mergers and acquisitions
D)   differentiation strategiesE) None of the above
F) B) and C)

Question 9

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

Question 10

When a firm diversifies into ________ businesses,the primary potential benefits to be derived come from ________ relationships-those businesses that share intangible and tangible resources.

Accepted Answer

A)   related; hierarchical
B)   unrelated; hierarchical
C)   related; horizontal
D)   unrelated; horizontalE) A) and D)
F) B) and D)

Question 11

Management restructuring typically involves changes in the composition of the ________,organizational structure,and reporting relationships.

Accepted Answer

A)   middle management team
B)   top management team
C)   lower management team
D)   board of directorsE) All of the above
F) A) and D)

Question 12

Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?

Accepted Answer

A)   Portfolio models compare SBUs on only two dimensions under the assumption that these are the only factors that matter.
B)   Portfolio models view each SBU as a stand-alone entity.
C)   Portfolio models rely on loose rules regarding resource allocation across the SBUs.
D)   The evaluation process risks becoming mechanical and oversimplified.E) A) and B)
F) A) and C)

Question 13

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 D)
F) A) and B)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 C)

Question 16

If a multinational firm paid too high a premium for the common stock of the company,this can lead to

Accepted Answer

A)   divestiture.
B)   expansion.
C)   cost savings.
D)   acquisition.E) B) and D)
F) All of the above

Question 17

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

Question 18

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

Accepted Answer

Feedback: Potential benefits can be gain...

Question 19

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

Accepted Answer

A) True 
 B)False

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 B)

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

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

Correct AnswerverifiedShow Answer

If a multinational firm paid too high a premium for the common stock of the company,this can lead to

Correct AnswerverifiedShow Answer

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

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

Academic research indicates that on average acquisitions do not create shareholder value for acquiring firms.Using examples to support your response,give some explanations for this observation.

Correct AnswerverifiedFeedback: Research shows that a majority...View AnswerShow 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 is an example of

Correct AnswerverifiedShow Answer

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

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

Portfolio models are used to assist a firm in

Correct AnswerverifiedShow Answer

Which of the following is not a downside of portfolio models used to assist a firm in balancing its portfolio of businesses?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a firm diversifies into ________ businesses,the primary potential benefits to be derived come from ________ relationships-those businesses that share intangible and tangible resources.

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

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

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

Management restructuring typically involves changes in the composition of the ________,organizational structure,and reporting relationships.

Correct AnswerverifiedShow Answer

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

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-page story,and create excitement in markets.

Correct AnswerverifiedShow Answer

According to BNP Paribas chief economist,Julia Coronado,when businesses feel confident about the future they are more aggressive in looking for ways to grow and expand their operations.You would expect the volume of mergers and acquisitions to ________ during this period.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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Feedback: Research shows that a majority...
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The primary means by which a firm can diversify are ,,and .

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When a firm diversifies into businesses,the primary potential benefits to be derived come from relationships-those businesses that share intangible and tangible resources.

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